Westpac warns Omicron outbreak reveals ‘multi-speed’ economy

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Westpac’s head of corporate banking says hardship claims from the bank’s customers have been much lower than in previous waves of the pandemic, but warns the Omicron wave has created a multi-speed economy.

While many consumers are avoiding physical stores, Westpac chief executive Shane Howell said the hardest-hit industries include hospitality, entertainment and gyms, and some businesses in those parts of the economy requested additional financial support.

Westpac said businesses with heavy foot traffic were struggling.Credit:James Alcock

Even so, Mr Howell said the total number of hardship requests from business customers had been much lower than in previous waves of the pandemic, and some businesses selling their products online were thriving.

Mr Howell said it was still too early to tell what the economic impact of the Omicron wave would be, but there was less uncertainty than in the early stages of the pandemic, and customers were generally more confident than business conditions would improve once the number of cases dropped.

“It really is a multi-tiered game at the moment. There are customers who are really struggling – those exposed to foot traffic, High Street businesses,” Mr Howell said in an interview.

“But there are also customers who have been able to adapt to this online digital transformation that’s happened over the last two years and are doing really well,” he said.

As the number of COVID-19 cases rose over the summer, brick-and-mortar retailers have been hit hard by consumers trying to dodge the virus by largely avoiding stores, but others businesses suffered from operational problems, including staff and inventory shortages. Mr Howell warned that the pandemic was also increasingly taking a toll on the mental health of some economic operators, as many grappled with the disruption of supply chains.

“With supply chain issues, people are booked to do a job and then it disappears, then all of a sudden there’s excessive demand and they can’t deliver, so there’s a lot of anxiety. in the system,” he said.

In a sign of the severe impact on retail businesses, the Australian Retailers Association said last week that a survey found around two-thirds of its members had isolated staff, and most viewed trading conditions as “bad” or “terrible”.

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