Treasurer Josh Frydenberg said coronavirus would be worse for economy than $100billion bushfire cost

The coronavirus outbreak is set to be worse for the Australian economy than the almost unprecedented summer bushfire crisis.

The blazes that destroyed millions of hectares in New South Wales and Victoria are forecast to wipe $100billion from Australia’s gross domestic product.

Now, Treasurer Josh Frydenberg fears the coronavirus will be even more severe, as the contagion financially assaults China – Australia’s biggest trading partner.

‘The message is very clear, the impact will be more significant than the bushfires, and it plays out more broadly across the Australian economy,’ he told reporters on Tuesday.

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University of Queensland professor of economics John Quiggin last month estimated the bushfires could cost the economy $100billion. 

That was before China announced the first cases of coronavirus in the city of Wuhan.

The deadly respiratory illness is already threatening Australia’s lucrative education exports to Chinese international students – an industry worth $12billion a year.

A slower world economy would also jeopardise Australia’s $51billion worth of iron ore exports to China.  

The tourism sector, already struggling since the bushfire crisis, is also set to suffer from the coronavirus, as fewer people travel worldwide. 

Qantas has already suspended, until the end of May, direct flights from Sydney to Shanghai and on Tuesday, its share price tumbled by another 2 per cent .

The Australian Securities Exchange lost $53billion, at the worst point of Tuesday trade, before the benchmark S&P/ASX200 finished the day 1.8 per cent weaker.

Combined with Monday’s losses, the ASX has shed more than $100billion in just two days. 

CMC Markets chief strategist Michael McCarthy said new outbreaks of coronavirus in South Korea, Japan and Italy had panicked share markets, just five days after the ASX reached a record high. 

‘We’ve seen such a dramatic action over the last couple of days,’ he told Daily Mail Australia on Tuesday.

‘Investors certainly hit the panic button in trading.’

The double-whammy of the bushfire crisis and a likely coronavirus pandemic is set to jeopardise the Coalition’s election promise of a budget surplus in 2020 – which if delivered would be the first since 2007.

The April budget forecast a surplus of $7.1billion for the 2019-20 financial year.

That shrunk by 30 per cent to a forecast surplus of $5billion in December, even before the bushfires intensified, as Treasury released its Mid-Year Economic and Fiscal Outlook. 

Prime Minister Scott Morrison defended his pre-election promise of a budget surplus – a key element of the Coalition winning a third consecutive term in May.

‘Hands up those who thought there was going to be a coronavirus epidemic when the budget was released last May? Of course no one did,’ he said in Canberra.

The Prime Minister described the virus as an ‘unknown global shock’.

‘This is not like a global financial crisis. This is a global health crisis,’ he said.

ANZ head of economics David Plank said the bushfires and the coronavirus were likely to cause an economic contraction in the March quarter and threaten the government’s promise of a surplus budget.

‘The surplus may have disappeared for this year – in a way that’s sort of appropriate,’ he told Daily Mail Australia on Tuesday. 

‘The bushfire will have had some impact, but then the virus will as well.’

Coronavirus, also known as COVID-19, has infected 80,000 worldwide since it originated in December at an animal market in Wuhan. 

This includes 24 people now in Australia.

Then there are another 47 Australians who are among the 219 confirmed cases of the coronavirus contracted on board Diamond Princess cruise ship at Yokohama in Japan. 

Coronavirus has killed more than 2,600 people globally and can cause severe lung damage and trigger multiple organ failure, particularly among the elderly or frail.