The capex survey for Q4 showed capital expenditure falling sharply at the end of last year. And while mining firms’ first estimate for capital spending in 2020/21 was very strong, non-mining firms are less upbeat. Indeed, the weakness in business sentiment and profitability suggests that investment spending will fall at least until the middle of this year before rebounding. Meanwhile, we now estimate that the government will run a $1 billion deficit this year which reduces the chance that the government delivers a large stimulus package in response to the coronavirus outbreak.
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