Australia has declared the coronavirus will become a global pandemic, and extended its travel ban on visitors from China, as a surge of new cases of Covid-19 around the world fuel fears containment measures have failed.

As well as increasing domestic preparedness, the Morrison government has also opened the door for economic stimulus, pending advice from Treasury, to deal with the impact of a potential pandemic, in a significant shift from its cautious posture earlier this week.

Guardian Australia understands the government is working up stimulus options for the education and tourism sectors – which have been hard hit by the virus – and is considering support for export industries.

The prime minister, Scott Morrison, told reporters on Thursday afternoon, after a meeting of the national security committee of cabinet, that “based on the expert medical advice we have received, there is every indication that the world will soon enter a pandemic phase of the coronavirus”.

The risk of a pandemic is upon us.

Morrison said the federal and state governments would activate their pandemic plans, preparing for widespread transmission of the disease.

The Australian government’s plan – the health sector emergency response plan for Covid-19 – involves an escalating series of responses, from self-isolation of suspected cases, enforced quarantining of known infectious patients, up to the closure of schools, cessation of public transport and advice – even orders – for people to work from home.

Under complementary state government pandemic plans: sports stadia may be sequestered as quarantine sites; police could be ordered to guard critical medical supplies, and governments may order entire suburbs, cities or groups of people to undergo mass vaccinations (once a vaccine is developed).

Under worst-case scenarios being contemplated by state and federal governments, forecasts say a pandemic outbreak could last up to 10 months, and 40% of the country’s workforce could be sidelined by illness or caring for family members.

Morrison said while the government’s response was being escalated, people should not – at this stage – dramatically change their daily routines.

“There is no need for us to be moving to having mass gatherings of people stop: you can go to the football and the cricket and play with your friends down the street, you can go out to the concert and you can go out for a Chinese meal.

“You can do all of these things because Australia has acted quickly, Australia has got ahead of this at this point in time. But to stay ahead of it we need to now elevate our response to the next phase.”

Globally, 82,000 people have been confirmed as having coronavirus, leading to 2,800 deaths. The vast majority of infections – and deaths – have occurred in mainland China but in recent days the number of new infections outside of China have raised concerns containment measures have failed.

On advice from the chief medical officer, the Australian government has chosen to extend its travel ban from China into a fifth week. It will continue to be reassessed weekly by the national security committee of cabinet.

The Australian government’s travel advice for citizens going to China remains at the highest level: Do not travel.

Morrison said there was no need, at this stage, for the government to impose travel bans for other countries despite rising infection rates.

The federal health minister, Greg Hunt, said he would meet with state and territory health ministers on Friday to discuss supply chains of critical medicine, and the potential establishment of dedicated fever clinics if the capacity of hospitals to deal with cases is overwhelmed.

“The national security committee today heard of the high likelihood and high probability that the world would soon enter formally into a pandemic stage, which has led to the invocation and implementation and activation of the coronavirus pandemic preparedness plan,” Hunt said.

He stressed that Australia remained in the “containment” phase of dealing with Sars-CoV-2, the virus that causes Covid-19.

Currently, there are 22 confirmed cases of Covid-19 in Australia. Fifteen of those cases were contracted in Wuhan, in central China, or via contact with someone who had been to that city, the epicentre of the outbreak. Another eight are from passengers who were on board the virus-stricken Diamond Princess cruise ship.

“The likelihood is somewhere sometime there is a further round of cases that may make it to Australia, this becomes a truly global event,” Hunt said.

“With the number of countries that are now affected, we have to be realistic about the likelihood of containment strategies into the weeks ahead.”

Hunt said Australia would now move to a “full preparation phase for all of the supply chains” and ensuring the “national medical stockpile” was sufficiently prepared for a widespread outbreak.

“Primarily now it moves to a formal engagement with the states where we are doing all of that work across medical stockpile, personal protective equipment, supply chain, in particular personnel.

“One of the things we’re most focused on is to make sure we have the personnel capacity if there is a surge within our hospitals and medical system, in the event of a pandemic.”

Hunt said if the coronavirus did break out in Australia, the emergency response plan for Covid-19 aimed to slow its spread and minimise its impact.

The government’s deputy chief medical officer, Prof Paul Kelly, said researchers continued to learn more about the disease watching its rapid spread across countries such as Iran, Italy and South Korea.

“Now we know more about this virus, how it spreads, how infectious it is, how likely it is to cause severe illness and in which type of people it may cause severe illness. I would stress that for 80% of people it’s a mild illness,” Kelly said.

“And so we’re preparing for all eventualities in terms of when it may or may not come to Australia, and how many people might get infected.”

Earlier in the week, the government downplayed the need for economic stimulus to support the Australian economy through the inevitable disruptions to supply chains and shifts in consumer behaviour.

But on Thursday, Morrison said the government was looking at measures that were “targeted and modest and scalable”. He said the virus was impacting trade and tourism, and there were also second-round effects that would dampen economic activity.

Morrison used the example of overseas students not being able to attend university because of the travel bans.

“And that’s not just the fact they’re not in a university, it means they’re not in the country which means they’re not participating in the economy. The second-round effects of these issues is what can be impacted. So that what is being addressed and that’s the work that’s being tasked.”

Thursday’s step-up sparked conflict between the government and the opposition. Morrison blasted Labor for disrupting the parliament with divisions at a time when the national security committee was deliberating. Labor expressed frustration that Morrison was escalating the Australian response without briefing the opposition.