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Ram Gorlamandala
May 07 2020

Tat Ignite Webinar Series – #2 Macro-Economic Reflections & Impacts on Australian Businesses

Tat Ignite Webinar Series – #2 Macro-Economic Reflections & Impacts on Australian Businesses
<p><em>TAT&nbsp;Ignite&nbsp;is a Webinar Series to engage our clients on current topics that affect the industry, business and portfolio companies.&nbsp;</em></p> <p><strong><em>Webinar#2&nbsp;- Topic:&nbsp;Macro-Economic Reflections &amp; Impacts on Australian Businesses, and it covered:&nbsp;</em></strong></p> <p><em>* &nbsp;How global trade will impact pre-COVID and post-COVID?&nbsp;<br /> * &nbsp;How the changes in global landscape impact Australian businesses?&nbsp;<br /> * &nbsp;The impact on current supply chain setup for business owners or stakeholders in global trade.<br /> * &nbsp;How are the potential global trade implications going to impact your supply chain and supply chain financing in the foreseeable future?&nbsp;<br /> * &nbsp;How do you prepare and face the headwinds expected in the current markets?</em></p> <p><em><strong>Summary</strong>:</em></p> <ul> <li>The fiscal response of governments to Covid-19 has been much more proactive than the past issues.</li> <li>Major consensus such as easing of trade restrictions;&nbsp;recovery building through 2021 so that the trade output gets back to 2019Q4 levels by the end of 2021.</li> <li>The impact of Covid has affected 90% of the world economy, and has spread economic distress (there is widespread depression, uncertainty, cost cutting and an aversion to risk).</li> <li>Governments are making efforts to support the economy and frame policies to assist recovery post the pandemic. It is critical that there is a robust framework to ensure bounce back of markets, once the government support is withdrawn in September 2020.</li> <li>There is a sharp rise in unemployment in Australia despite Jobkeeper (over 10% in three months).</li> <li>Few highlights from the Treasurers Speech to National Press Club on 5th May 2020 &ndash; Reskilling of workers, new infrastructure projects to maintain $100 billion ten-year pipeline, regulatory reform to reduce the cost burden, and tax and industrial relations reform to increase competitiveness.</li> <li>Global Trade volumes may drop by 13 &ndash; 32% in 2020; global economy may shrink by 3% in 2020 from previous growth projection of 3.4%, more than 60% expect trade flows to decline by at least 60% in 2020.</li> <li>The pandemic has accentuated the trend of alternative finance providers over banks, who can provide access to faster and more agile funding to help navigate the effects of Covid-19.</li> <li>Large banks have announced several supportive measures such as one-month maturity extension on trade loans, flexibility to convert unutilised trade lines into a revolving line for six months, interest / fee waivers, tenure extensions, alternative settlement arrangements, options to restructure borrowing and trade credit facilities, etc.</li> <li>Supply chain finance (SCF)&nbsp;has risen in popularity as a lower-cost source of funding for suppliers and a means of stabilising supply chain for buyers.</li> <li>With the current market cash crunch, there are several issues with debtor finance and therefore supply chain financing is becoming handy for businesses.</li> <li>Bank of England Governor Andrew Bailey pointed to emergency SCF as a likely solution for firms struggling with the impact of Covid-19.</li> <li>The Corporate Sector will be looking for new markets to set up a manufacturing base as Covid &amp;&nbsp;US tariffs affect production units in China. Prospective markets - India, Vietnam, Malaysia, Brazil, Mexico.</li> <li>With insufficient data and the unpredictable pandemic that has affected countries world-wide, it is impossible to predict the future of existing economic problems such as debt, asset prices, productivity, and protectionism. The role of the governments and the private sector is&nbsp;vital at this stage.</li> <li>The right balance between safety (health) and society (economy) is the way forward.</li> </ul> <p><strong>Highlights from our polls:</strong></p> <p><strong><img alt="" src="https://tat.capital/docs/uploads/2020/05/poll-answers2.png " /></strong></p> <p><strong><img alt="" src="https://tat.capital/docs/uploads/2020/05/poll-answers.png " /></strong></p>

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