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In the financial year 2020-21, when the world is grappling with the economic and mental impact of the COVID-19 pandemic, Australia saw 277,674 businesses exiting the trade – the lowest in three years.
According to the latest data released by the Australian Bureau of Statistics, 277,674 businesses or 12% of all the active businesses shut up shops.
This is the least number of business exits in three years. Last time when the country saw lesser business exits than this was 2017-18, when the country witnessed 273,237 business exits.
On the other hand, 365,480 new businesses – or 15.8% of total businesses also joined the trade.
This led to a net increase of 87,806 businesses (3.8%) in the active trading businesses in Australia – which currently stands at 2.4 million.
In 2020-21, the three industries with the largest net increase in businesses were: construction (an increase of 16,603 to 410,839 businesses); Professional, Scientific and Technical services (an increase of 14,432 to 316,462 businesses); and Health Care and Social Assistance (an increase of 10,674 to 159,076 businesses).
The decrease, on the other hand, came from warehousing businesses: Transport, Postal and Warehousing (-2.8%, with a decrease of 5,589 to 194,459 total).
The number of exits has been lesser than expected given that the lockdown to battle the pandemic has almost crippled all the major economies. In the US alone, the world’s largest economy, it led to a massive recession. Usually, economic downturns come with heavy stress on cash flow and the income statement of any company as the demand gets reduced.
