Australia is known as “the lucky country”.
Since 1990-91 it has not experienced a recession in its economy. The country even managed to duck the global financial meltdown of 2008 and emerge unscathed by its repercussions. Last year it lost the tag.
When COVID hit the world, people were bombarded with instructions to remain at home and maintain a safe body distance.
The country was also ravaged by extreme bushfires which destroyed 12 million hectares of land. The economy witnessed the shutdown of the logistics network, scarcity of work, and unemployment.
Australia’s international trade with China was affected because of its demand for an investigation into the outbreak of covid-19. China was the biggest buyer of Australia’s natural resources- coal, iron ore, natural gas.
International students went back to their country and there was a decline in tourism. GDP shrank 7% in April – June quarter, after a fall of 0.3% in the first quarter last year.
Things are not all doom and gloom.
Australia managed to contain covid-19 cases to very low levels. It has paced up the vaccination drive. Last year the government pumped up $200 billion in financial packages to support economic activity and delay the negative impacts of COVID and lockdowns. GDP rose by 3.1% in the fourth quarter, after expanding 3.3% in the third quarter.
Though not yet out of the woods , here are reasons for optimism about Australia’s economic revival – GDP in 2021.
This year the economy expanded 1.9% in the March quarter and 0.7% in the June quarter. Over the year the economy grew by 9.6%. The initial forecast for this year’s June quarter was a negative -0.1% decline.
The strong public demand and small depreciation in stock and trade is the reason for its growth this quarter.
Domestic final demand rose up to a strong 1.7% becoming the fundamental driver of GDP.
UNEMPLOYMENT RATE IN AUSTRALIA:
The unemployment rate was expected to reach a level of 5%, but it stood at 4.6% in July this year. This is a major setback but it’s only temporary.
Australia is witnessing a surge in economic activity. Despite continued lockdowns in major cities, The Australian economy added 2200 jobs and the number of unemployed people fell by 39900.
The Australian Bureau of Statistics has warned that falling unemployment numbers do not show a presence of a strong job market. The participation rate decreased from 62.2% to 62%.
The statistics show that 3million fewer hours were worked in July.
CONSUMER SPENDING AND CONFIDENCE:
The year’s consumer confidence is 30% higher than March and April 2020. The Westpac-Melbourne consumer sentiment index rose from 104.1 in august to 106.2 in September.
Consumer spending rose up to +1.1%. Consumption has currently gone up to 99.4. According to a business and consumer survey, the National Australia Bank saw business conditions grow 4 points to + 14 in August 2021.
Australians are optimistic about the future of their finances.
HOUSEHOLD WEALTH AND LIABILITIES:
Household wealth in Australia grew from $735.0 billion to $ 13,433.7 billion.
The household savings ratio declined from 11.6% to 9.7% in the June quarter. This decline was due to the rollback of job keeper’s and job seekers’ stimulus. The saving still remains at an elevated level. Higher than what it was in 2015-2019.
AUSTRALIANS HAVE PAID THEIR Credit Card DEBT:
According to the Reserve bank of Australia, Australians have cut their credit card debt by $22 billion in June to $19.5 billion in July.
This was significantly influenced by lockdowns in Sydney and Melbourne. Since the onset of the pandemic credit card debt has been in decline. The spend volume has dropped by 9.29% ( $2 billion ) in July. The entire volume of purchase is below $20 billion. It’s the lowest in the last nine months.
Expenditure on credit cards went down by 14% from June to July, recuperating 4% in August. Australians are setting out to cut on their unnecessary expenses amidst pandemics.
Even though we saw a contraction in economic activity in the September quarter, contrary to the 2.7% slide that the economists had predicted, GDP fell only 1.4 %. The Australian economy is bound to boom in the upcomic quarter, and it will also benefit from the cyclical recovery of the global market. Let’s just hope that it brings a reasonable amount of job security and income growth.
