Leader In World Economic Recovery
Australia is a leader in world economic recovery post Covid lockdowns. Food for thought for those seeking secure markets for investment and growth.
Even during the GFC Australia has remained buoyant and stable, avoiding recession apart from a single quarter last year as a direct result of lockdown. With a stable government, economy, legal system and standard of living, Australia has always been a prime target for migration and investment. Now it is looking even better, with pandemic-fed market instability, continuing to impact on global economies.
With the much awaited Federal Budget brought down 12th May 21, the economic outlook for Australia is surprising everyone with its strength of rebound from the effects of Covid-19, and the forecast for it to continue. The strength of the economy has been such that in the last 3 months Australia has experienced a $30 billion dollar improvement in the forecasted budget, with March 21 showing a small surplus. This has been brought about by huge iron ore revenues, and increased tax revenue due to the falling unemployment rates.
The Reserve Bank of Australia (RBA) has upgraded its economic growth forecast to hit 4.75% over 2021, unemployment will be about 5% by the end of the year, and the jobless rate is said to be about 4.5%. Despite forecast inflation of up to 2% by June 2023, the RBA is maintaining its low interest rate policy with the current cash rate of 0.1% to hold until 2024.
With the government commitment to drive unemployment down with fiscal policies, opportunities for business and investment are looking positive in a global market where other economies are struggling. $500 million will be specifically allocated to attracting new business and talent from overseas.
After a successful policy on border security to control the virus spread, Australia has very low and contained rates of infection with single digit reports, and virtually all identified within the quarantine program. The consequence of this is business confidence and a return to revenue forecasts exceeding those of a time pre-Covid.
Australia is now looking to open its borders in 2022 to migrants, students and travellers to continue to stimulate the economy. The budget is heavy on unprecedented spending for infrastructure projects with eight major road projects, regional upgrades, improved digital connectivity for businesses, and packages for road and rail projects. $10 billion over 4 years will be injected into aged care and the employment of thousands more in the residential home staffing levels.
A digital economy strategy costing about $1.2 billion will be created, with training programs, development of AI technologies, and tax breaks for computer games developers. Childcare will be a major focus, with subsidies for fees to be increased, putting pressure on staffing for anticipated growth in the sector.
In the energy sector, construction of gas-fired power stations signal the downturn in Australia’s reliance on coal, as well as allocation to develop additional hydrogen hubs and support for carbon capture and storage projects. There will be a focus on Investment in renewables, minerals exploration, and east coast gas projects. $600 million is to be allocated to initial funding for disaster preparation and mitigation projects, and the establishment of an Australian Climate Service. Defence will benefit from a $747 million base upgrade in the Northern territory. Biodiversity projects are also to receive an injections of funds.
So the message from Canberra is that we are back and open for business. If current levels of business confidence and activity are any indication, it would certainly seem the case.
