The impact of the coronavirus combined with the ongoing bushfire across the eastern and southern states has clearly thrown the start of the year into economic turmoil. But does it mean a recession is coming, and if it means no budget surplus, does that really matter?

One of the problems of being a relatively small economy compared with the US, China and the EU is that we are very much subject to the fortunes of economies abroad.

When asked about the prospects of a surplus, Josh Frydenberg explained to David Speers on ABC’s Insiders: “What we do know is that these events outside of our control are going to have a significant impact on the Australian economy.”

Oddly, such an excuse has never been accepted by the LNP to explain why the budget went into deficit during the GFC. Times may change but hypocrisy never does when it comes to economic debate.

It is clear that the chances of a surplus have taken a hit, but we should note that Frydenberg’s attempt to suggest the government’s spending on bushfire recovery is a big factor is complete tosh.

Frydenberg told Speers that “as for delivering the surplus, our first focus is on delivering the support to the people who need it most. That’s why the prime minister in an unprecedented response announced a $2bn bushfire recovery”.

Except the current projected surplus for this financial year is $5bn, and of the $2bn bushfire recovery spending just $500m is projected to be spent this year.

The budget won’t stay in a deficit because of spending but revenue – and mostly a drop in projected company tax.

We can see this from the share prices of BHP and Riot Tinto:

The mining sector has taken a hit since the coronavirus really took hold around 10 days ago, due to a drop in China’s output hitting the need for iron ore and as a result iron ore prices have fallen.

Any such falls inevitably flow through to company taxes.

But should the budget balance remain in deficit it would purely be a political issue rather than an economic one. And the reason it is a political issue is because the government stupidly has already taken credit for future events.

Last March Scott Morrison defended his statement that the government had delivered a surplus, telling Leigh Sales on ABC’s 730 that “We brought the budget back into surplus next year.”

Such a mangling of the tenses deserves to be mocked and is also a nice reminder that hubris is always a dangerous position for a politician to adopt.

More important for us is the actual impact on the economy.

On this aspect we have already heard talk of a recession.

You can understand why, especially given the ban of non-Australian citizens and residents travelling from China for 14 days.

It really could not be worse timing.

Each year February is the biggest month for arrivals from China. Last year there were 206,300 Chinese arrivals to Australia in February – nearly 15% of all Chinese arrivals last year:

The reason is not because Chinese think February is a great time to holiday in Australia, but because February is when the university and college years begin. China is the biggest market for international students coming to Australia.

Last year some 260,500 Chinese were enrolled in education in Australia – more than a quarter of all international students:

So right now universities around Australia are trying to work out how they are going to deal with this – especially if the ban goes for more than two weeks.

The hit is not just to the education sector, but also the loss of rents for accommodation and retail trade that will take a hit at a time when it is already struggling due to the bushfires.

The hit to education and mining will likely cause our exports to drop in the March and possibly the June quarter:

In the September quarter last year, net exports accounted for 0.2% points of the 0.4% growth of GDP – effectively half of economic growth. Should we have a sudden fall in such exports, then our already meagre GDP growth will go perilously close to, if not into, negative territory.

We saw this in 2003 when the Sars outbreak hit out net exports. Back then the contribution of net exports to GDP growth fell around 0.25% points. At that time it didn’t matter too much because we had massive amounts of mining investment; now we don’t:

Certainly since the coronavirus outbreak the market has become much more sure that the Reserve Bank will need to cut interest rates to prop up the economy – there is now a better than 50% chance of two cuts in the cash rate by this time next year:

So all in all, not good news.

But I think we should pump the breaks a bit on talk of a recession.

Of course whenever you hear that term in the media it is referring to two consecutive quarters of negative GDP growth – the so-called “technical recession” (although there’s nothing technical about it) .

Two such negative quarters are certainly a real possibility given our reliance on exports to sustain overall growth. But I have long been loath to use such a simplistic definition. I prefer to also look at the impact on employment.

For me you cannot have a recession with just negative GDP growth if unemployment is not also rising – and rising at least 1% point in a 12 month period.

Right now there is little change in the unemployment rate, and while there are few signs of improvement, neither are there any great warning signs that unemployment is about to jump.

The latest building approvals figures out on Monday showed a nice increase in the trend rate of private-sector approvals off the back of big rises in approvals for apartments:

That is a very good sign for the construction sector and suggests that while the economy remains relatively tepid, it is not all gloom and doom.

The bushfires and the coronavirus will almost certainly cause a hit to the economy and the budget balance. It will also most likely mean the Reserve Bank will need to cut rates again earlier than it otherwise might have wished.

But talk of a recession is a bit premature. And even if a “technical recession” occurs, given the big hit will be on the mining sector, which is not a large employer, it is far too early to be starting to predict anywhere near the level of job losses usually associated with a recession.

• Greg Jericho writes on economics for Guardian Australia