Get ahead of the downturn with the right financial support

Dubbing the conditions induced by the COVID-19 pandemic ‘The Great Lockdown’, the International Monetary Fund (IMF) has predicted a sharp decline in global economic growth for 2020, with Australia’s economy expected to contract by 6.7% or almost $130 billion. 

The World Economic Outlook Report also warns of a significant and enduring rise in Australia’s unemployment rate across the next two years, jumping from 5.2% in 2019 to 7.6% in 2020 and 8.9% predicted for 2021.

But there are steps you can take to prepare for an economic recession, even if you’re one of the many Aussies struggling right now. We’ve scanned the fine print and found five ways to help you move forward financially (read on for more details).

• Apply for government Coronavirus support payments
• Investigate bank relief packages
• Look into rebates on energy costs
• See if your business is eligible for government and bank support
• Negotiate a rental arrangement to see you through the crisis

In Australia and around the world, this will mark the most significant recession since the Great Depression. Economic Counsellor and Director of the Research Department at the IMF Gita Gopinath describes it as “a crisis like no other.”

Globally, economic growth is predicted to fall to -3% in 2020; a stark contrast to the 3.3% growth anticipated in January. For scale, the Global Financial Crisis resulted in a -0.1% global economic growth in 2009.

But this IMF prediction is dependent on the assumption the pandemic will recede in the second half of 2020. If the pandemic persists later into this year and has a resurgence in 2021 (the worst-case scenario in the report), the IMF estimates the global economy would shrink by closer to 11%.

If the pandemic does fade from mid 2020 and effective policies limit widespread financial strain, Australia’s economic growth is predicted to rebound by 6.1% in 2021. But Gopinath points to the complexities all economies face in recovering from a dual health and financial crisis. 

“Policymakers are providing unprecedented support to households, firms, and financial markets, and, while this is crucial for a strong recovery, there is considerable uncertainty about what the economic landscape will look like when we emerge from this lockdown,” she said.

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How can I access financial support during ‘The Great Lockdown’?

Whether you’re a struggling rental tenant, homeowner, business owner or a recently unemployed individual, there are many packages and policies providing a short reprieve from financial burdens, and other long-term protections. 

• Apply for government Coronavirus support payments
  If you have been financially impacted by the pandemic and subsequent lockdowns, you may be eligible for ongoing income support and additional one-off payments. Eligible Australians can access the $550 Coronavirus supplement, bringing the maximum benefit to $1,115.70 per fortnight.
• Investigate bank relief packages
  Many banks are providing emergency relief to personal and business customers. Features include fee waivers on early term deposit withdrawals, interest rate freezes and reductions on loans, options to defer or restructure home loan repayments, and emergency credit card limit increases.
• Look into rebates on energy costs
  Save on the basics by checking out Mozo’s energy plan comparisons, or see what concessions your current supplier is offering. Energy Networks Australia unveiled a network relief package offering rebates, deferrals and fee waivers, while individual providers are also offering support.
• See if your business is eligible for government and bank support
  Future economic activity is largely dependent on the maintenance of businesses through this unstable period, and there are heaps of support options available, from lump-sum government injections to employee-retention schemes and bank product savings.
• Negotiate a rental arrangement to see you through the crisis
  The states and territories are individually making moves for rental relief to support tenants and landlords on residential and commercial leases. Keep up to date with any rent-related rebates or grants to take the pressure off now and keep you in the green down the road.
• Invest in your emergency savings fund
  For many who’ve lost their jobs or are struggling to pay down debt on a reduced income, this won’t be the most attainable goal. But if you have the means, planning forward and contributing more to a savings pool for future crises will put you in a healthier financial position.