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Editor's Note: Take a look at our featured best practice, Business Continuity Planning - Guide, Process and Tools (61-slide PowerPoint presentation). The disruption COVID-19 caused has made businesses more aware of the importance of business continuity planning (BCP) for effective disruption-related preparation, response and recovery. Although the term "business continuity" is often used as a synonym for IT Disaster recovery (DR), [read more]
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After a tumultuous 2020 for global economies, hopes are high that 2021 will be a better time for all. One country’s economy that is expected to recover well is Australia.
The country has fared well during the pandemic, containing the infection well enough for life to return to some semblance of normal in large parts of the country. With the vaccine rollout underway, the country is well-positioned to come back from a tough 12 months.
But what does the economy look like now? How are businesses set to perform this year?
The signs of a bounce back
At the height of the coronavirus outbreak in Australia, it was predicted by Deloitte that a second wave could cost the country $100 billion in lost income. By September 2020, Australia was in a recession, which came as a blow after 30 years of consistent economic growth.
But as time has gone on, things have changed. According to Deloitte’s Access Economics growth outlook for the coming months, around 300,000 people are expected to re-join the workforce and there is expected to be 400,000 new jobs by the end of 2022. Additionally, unemployment is expected to drop below 6% by 2023.
For businesses, this is good news. More employment means there will be more household spending and business investment. In fact, business investment is expected to grow by 3% in 2021.
However, as these green shoots of recovery appear, business owners will understandably be wary. Industries will begin to improve, with Deloitte predicting that accommodation and food services and transport and storage seeing the biggest improvements. But those working in these and other sectors are still recovering from being in a recession which is only technically over, and wages aren’t likely to rise for a while.
Despite this, the country is making headway and economic growth is on an upward trajectory compared to other countries.
Who are Australia’s largest trade partners?
As well as Australia’s GDP, trade is a huge factor to consider when looking at income for the country. Some of its largest trade partners are Japan, the US, and Korea. However, China is by far Australia’s largest trading partner, worth almost $240 billion.
Recently, there has been growing tensions between the two nations, with Australia accusing china of undermining the free trade agreement. The agreement was signed in 2015, reducing tariffs. But in May 2020, China imposed sanctions on Australian goods and added tariffs of up to 200% on Australian wine in response to what China claims were illegal trade practices.
Like any major country, Australia’s trade is crucial for supporting jobs and the local economy. As a result of recent tensions with China, it’s likely that forecasters will be keeping an eye on the forex markets as these have a significant impact on the cost of imports and exports.
How will the global economy fare?
Australia is among several countries expected to see improvements in the coming year. According to the latest world economic outlook growth projections, the global economy is projected to grow 5.5% in 2021 and 4.2% in 2022. The 2021 forecast has been revised up by 0.3%, largely as a result of the vaccine rollout across the world.
If Australia continues as projected, there could be signs of steady growth for the country in the coming year.
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