SYDNEY, Australia – Forecasts on the Australian economy sees a significant bounce back next year after the pandemic is over and done with, but not all economists agree with the sentiment.
2021 sees a much better standing for the country’s economic growth. The International Monetary Fund also said previously that the world economy is looking towards a much an optimistic V-shaped recovery after the pandemic.
Shortly, on the other hand, forecasts on the country’s economy see a considerable plunge before 2020 ends. However, in the next year, experts expect it to surge back up to its previous standing before the coronavirus outbreak happened.
Based on the graph from the IMF forecast, that gross domestic product of Australia is looking towards a drop of 6.7%, but they expect it to go up by 6.1% by next year.
2020 is looking like a bad recession for the country. The only positive about it, according to the forecast, is whatever recession is going to happen will be a bit short.
Although the IMF world economic outlook as of April 2020 is optimistic, not all experts and economists agree with the sentiment.
According to the Commonwealth Bank, the Australian economy is most likely going to stay dull in the coming year. Belinda Allen, the senior economist at Comm Bank, said in a written statement that they think residential construction and business investment will remain to slug throughout 2021.
Ms Allen further stated that they don’t think that the spending habits of most Australian individuals and households will gain a full recovery to its previous level before the pandemic happened.
The coronavirus outbreak affected each individual and household worldwide. Most people lost their jobs indefinitely, and this was also a grinding period of wealth destruction. After the outbreak is over, people are most likely not going to go buying and paying for luxuries that the world has to offer.
The market is expecting individuals and households to be frugal for a while, and that will hurt the country’s economy, experts said.
With this, businesses in Australia is likely to stay a bit dull for a little longer after the pandemic ends. More people are also taking on debts and loans to survive during this health crisis, and the primary focus when the health crisis is up will be repayments instead of scaling their businesses up.
The Commonwealth Bank also releases its forecast of the country’s economy. The figure and chart from the bank show that Australia’s GDP is most likely going to level back to its previous rate by the end of 2022.
The economy of the country mostly depends on the economic standing of the rest of the world these days. Even if Australia would be successful in eradicating COVID-19 from the state, most of its sectors will still depend on the rest of the world. That includes tourism, education, mining, and farming sectors in Australia.
Based on the observation of the Grattan Institute, the rest of the world continue struggling because of the pandemic. Based on the statement written by Brendan Coates, the author of the recent analysis, the most notable feature of the current health crisis is that it affects all major economies at the same time.
Mr Coates further stated that the prospects of having a V-shaped recovery in the country’s economy, as what the IMF said, is remote. The period upon which the pandemic will continue remains uncertain. He also commented that the direct effects of the growing unemployment rate in the country towards the economy are most likely going to persist for a considerable period.
Professor Jeff Borland, the top labour market economist in Australia, also said that unemployment in the country would primarily affect those who are leaving school. It is what he called as scarring, which, according to Mr Borland, can happen when there are long-term negative effects from an adverse experience during the early work life of an individual.
He further stated that students who were looking to leave school in 2020 to 2021 are most likely going to experience the hardship of getting jobs. At the moment, the future of the country and its economy is looking cloudy, not even considering Australia possibly getting a second wave of COVID-19.
Based on the unemployment rate supplied by the ABS Labor Force, unemployment was much higher than before the recession in the 1990s. It shows that the percentage of people out of jobs can get worse rapidly and get better much slower.
If that scenario happens, the forecast from the IMF will look even worse. Based on the growth downside scenario released by the IMF, if the world will experience a second wave of the pandemic, the GDP wouldn’t level up to its previous status before the outbreak happened even in 2024.
Although the long-running implications of the pandemic to the country’s economy remain uncertain, these predictions and forecasts from experts remain worth considering on both the Australian individuals, households, and the nation’s choices.