The latest Deloitte Access Economics Business Outlook figures reveal that Australia is well on the road to economic recovery in 2021.
“COVID numbers are very low, the vaccine news is excellent, confidence is rebounding, Victoria is catching up to the recovery already underway elsewhere, there are heartening developments in job markets, and China’s trade war with Australia has, so far at least, actually added to national income rather than hurt it,” Deloitte economist Chris Richardson said.
According to the report, which was released on Monday, the unemployment rate will decrease from 6.8 per cent to 6.7 per cent in the 2020-2021 period.
In July 2020, more than 1 million Australians lost their jobs as a result of the COVID-19 pandemic, with unemployment peaking at 7.5 per cent as shops closed their doors and businesses filed for bankruptcy.
According to Mr. Richardson, the job market has steadily improved since then with six out of every seven of the initial job losses reclaimed.
“Although unemployment and underemployment will be much higher than they were pre-COVID, they’re also falling much faster than feared,” he said.
Improvements in the jobs sector could cushion the blow from the withdrawal of the JobKeeper Payment scheme, which will cease in March this year – exactly one year after its introduction by the Federal Government.
Despite the promising numbers, Mr. Richardson does not expect the annual wage growth to rise until unemployment rates fall below 6 per cent, which he says will not happen before 2023 – even then, it could be years before they reach pre-COVID levels.
Along with the annual inflation, interest rates are also likely to remain low for the time being.
“Australia has made many mistakes in juggling COVID, but so far we’ve made fewer mistakes than most of the globe. You’d rather be here than almost anywhere else,” he said.
“Encouraging signs” for the economy
Shadow treasurer Jim Chalmers is optimistic about the economic recovery in parts of Australia, but warns against celebrating too early.
“We welcome any encouraging signs in the economy. But for it to be a good recovery, the right kind of recovery, we need to make sure that there’s job security and wages growth for ordinary working families,” he said.
“There’s no decent recovery without a recovery in wages. It’s as simple as that.”
“The Morrison Government should not and cannot declare victory while more than two million Australians are either without a job or don’t have enough hours and wages are stagnant.”
The Deloitte report, however, shows that Australia is heading in the right direction, and that economic recovery has been significant.
Victoria, despite having the longest and most costly lockdowns, is predicted to have the fastest economic growth at an increase of 5.3 per cent in 2021, followed by Queensland (4.6 per cent), and NSW (4.4 per cent).
Industries including accommodation and food services, transport and storage, and farming and fishing will see the most improvement, as long as state borders remain open and virus cases remain low.