Bushfires and the coronavirus have given Treasurer Josh Frydenberg a "get out of jail card" for having to bring down an ill-timed budget surplus, a leading economist says.
The travel ban on Chinese visitors and students entering Australia in response to the virus, now known as COVID-19, is having a huge financial impact on the Australian economy, running into billions of dollars.
It may also force the government to forgo its much-promised budget surplus for this financial year.
"What an opportunity for the government to wiggle out of a silly commitment to make a surplus no matter what," University of NSW Business School economist Tim Harcourt told Sky News on Thursday.
The much-travelled Mr Harcourt, known as the "Airport Economist", said governments are there to govern for full employment and growth.
"What a get out of jail card for Josh Frydenberg. I'd grab it with both hands if I was the treasurer," he said.
Global credit rating agency Standard & Poor's said a short and temporary delay in balancing the federal budget is unlikely to strain Australia's creditworthiness.
"If, however, the virus cannot be contained as we expect, or if other unforeseen events emerge within the next few months, then the economic impact could escalate, with more severe credit implications, particularly in relation to Australia's fiscal position," the agency warned in an analysis on Australia.
National Australia Bank chief economist Alan Oster, like S&P, expects economic growth to be trimmed by half a percentage point in 2020.
"We are not talking about a recession," he told ABC radio.
"The government can fire up fiscal policy. I don't know whether it will, and at some stage the Reserve Bank will probably have to help a little bit as well."
However, Reserve Bank governor Philip Lowe gave no hint that he is about to cut interest rates again, remaining optimistic about the outlook.
"Once the infection rate stabilises, the number of cases is not rising, I think we'll see Chinese (economic) stimulus," Dr Lowe told an Australia-Canada Economic Leadership Forum in Melbourne.
"That will be good for us and we'll return to that gradually improving trend we looked like we were on before the virus."
However, health officials in the Chinese province of Hubei reported both a jump in new virus cases and deaths as it adopted a new methodology for counting infections.
New cases in the province rose by 14,840 on Wednesday while 242 people died from the virus on the day, bringing the total to 1310.
Australian Associated Press