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Summary
- Industry experts suggest that the Australian economy is faring better than other nations
- GDP is expected to regain throughout the second half of 2020-2021
- Targeted stimulus policies by the government should boost up the economy overall
There was not a single economy across the globe that did not falter in the year 2020, owing to the COVID-19 pandemic. The Australian economy is no exception.
Following the last year’s obvious contraction, the global economy is resurrecting and so is the Australian economy.
For Australia, a revival in domestic expenditure and fixed investment, encouraging fiscal and economic policy actions, and the slow but steady reopening of the global economy should feed the rebound.
Even though the restrictions on travel – domestic and abroad - suggest a downward trend, the return to normalcy may take time but is bound to happen eventually.
A must read: How did the economy get affected by the pandemic?
The latest retail trade figures from ABS suggest that we can be hopeful:
- In November 2020, the Australian turnover rose 13.3% as compared to November 2019.
- Household goods retailing shot up 12.7% in November.
- Clothing, footwear, and personal accessory retailing climbed up 26.7%.
- The department stores went up by 21.1% in November, while other retailing shot up 7.9%.
- Also, cafes, restaurants and takeaway food services soared 6.7% in November.
Economists and researchers say that Australia is doing quite well as compared to other nations.
Workforce, a key element in suggesting the path of economic growth, also fuels the possibilities of a rebound in 2021. Stats from ABS highlights:
- Unemployment rate declined to 6.8% in November.
- Participation rate soared to 66.1%.
- Employment grew to 12,860,700.
- Employment to population ratio increased to 61.6%.
- Underemployment rate declined to 9.4%.
- Monthly hours worked went up by 43 million hours.
A must read: Is Australia out of recession?
Future recovery is optimistic
Real GDP to recover
The Australian GDP is supposed to recoup over the second half of 2020-2021 and bounce back firmly in the following financial year. According to Mid-Year Economic and Fiscal Outlook (MYEFO), Real GDP is expected to rise by 4.75% in 2021-22. Lessening of limits on tourism, hospitality and retail are expected to boost development. Also, tourism is likely to regain as different governments have determined various arrangements regarding travel, keeping COVID-19 in mind.
It is possible that the Real GDP rises at 3.0% annually over the next three years (2021 to 2024). Robust economic and financial impetus is predicted to help a rally in the overall economic structure.
Also, the anticipated hikes in the expenditure by state government will be boosting the public sector capital expenditure, specially through projects to develop transportation infrastructure.
Overall consumer sentiment
It is expected that consumption may remain lower than its pre-COVID-19 level till 2021 end. However, the consumer outlook is supposed to expand in 2021-22 and anticipated to regain gently over the next few years. A drop in the joblessness rate and convalescing domestic discretionary incomes will possibly drive this revival.
Bottom line
The Australian Government revealed a variety of targeted stimulus policies in the 2020-21 budget, released in October 2020. That featured tax reductions for businesses, personal income tax cuts, increase in infrastructure construction et al. All this is expected to light up the economy overall.
