Invest
Australian economy back to pre-COVID levels by 2021
The Australian economy is expected to bounce back to pre-COVID levels by the end of 2021 as wins on the health front and aggressive government policy have limited damage while boosting business and consumer confidence, an industry expert has revealed.
Australian economy back to pre-COVID levels by 2021
The Australian economy is expected to bounce back to pre-COVID levels by the end of 2021 as wins on the health front and aggressive government policy have limited damage while boosting business and consumer confidence, an industry expert has revealed.
While being buoyed by overall prospects of the Australian economy Janus Henderson Investors’ Australian fixed-interest investment strategist Frank Uhlenbruch said new outbreaks of COVID in Sydney and Melbourne and Australia’s relationship with China show Australia is not completely out of the woods.
“We still look for the Australian economy to rebound by around 5 per cent over 2021, though the latest outbreaks and reintroduction of state border controls have increased downside risks,” Mr Uhlenburch predicted.
“While a 5 per cent growth rate looks very high, we don’t expect the economy to reach the end of 2019 levels until late 2021.”
Mr Uhlenbruch added that the fund manager expected the economy to reach end-2019 levels in late 2021, as the “slack” built up in terms of unemployment and wage suppression would take a number of months to recoup.
“The economy will have built up considerable slack and this will continue to show up in an elevated unemployment rate, low rate of wages growth and inflation rate below the RBA’s 2 -3 per cent target band,” he said.
“With the cash rate now at 0.10 per cent and the RBA reluctant to move into a negative rate regime, further easing, if needed, is likely to come in quantitative form.”
Mr Uhlenbruch told investors that historically low-interest rates will persist for the next couple of years driving demand for income-producing assets.
“The preconditions for a shift in accommodative policy remain ‘outcome’ based. Fiscal policy will move from accommodation to consolidation only when the unemployment rate falls below 6 per cent,” he explained.
“Monetary conditions will only normalise (first tightening in a new cycle) when actual inflation is sustainably in the 2 -3 per cent RBA target band and the labour market is at full employment. We do not see these outcomes being achieved over the next couple of years.”
About the author
About the author
Economy
Australia’s exports rise to fourth-largest on record
The high price of iron ore has offset Chinese sanctions, with Australia recording its fourth-largest trade surplus on record, official figures have revealed. ...Read more
Economy
Coalition commits to climate resilience as new report bares shocking cost of inaction
Australia has announced that it is joining 118 countries in signing two global initiatives to plan for the risks associated with climate change, as a new report reveals the cost of extreme weather i...Read more
Economy
How CSIRO plans to turn landfills into a billion-dollar industry, tripling jobs
Australia’s national science agency is saving plastics, glass, paper and tyres from landfills and turning them into a billion-dollar industry that is set to triple in job creation, an official state...Read more
Economy
COVID consequences ‘will come home to roost’
Markets are enjoying an easy ride despite the economic damage wrought by COVID-19, but “there will be a reckoning”. ...Read more
Economy
Global economy predicted to pause before soaring in 2021
2021 will provide investors the opportunity to cash in on private markets and businesses hurt, but not permanently damaged, by the pandemic as accommodating policies and pent-up demand drive global gr...Read more
Economy
5 predictions for the Australian economy in 2021
The Australian economy is tipped to be one of five nations to outshine, with a win on the health front likely to act as tailwind, a new report has revealed. ...Read more
Economy
Deloitte calls vaccine a ‘game changer’ as 77% of Aussies welcome jab
As many as three-quarters of Aussies are willing to be vaccinated once a new coronavirus vaccine becomes publicly available, new research has revealed, as Deloitte Access Economics calls the vaccine ...Read more
Economy
Markets react to Biden’s stimulus package
The US markets have reacted negatively to President-elect Joe Biden’s US$1.9 trillion ($2.44 trillion) bailout proposal, amid mass job losses as the US continues to struggle with the COVID-19 pandem...Read more
Economy
Australia’s exports rise to fourth-largest on record
The high price of iron ore has offset Chinese sanctions, with Australia recording its fourth-largest trade surplus on record, official figures have revealed. ...Read more
Economy
Coalition commits to climate resilience as new report bares shocking cost of inaction
Australia has announced that it is joining 118 countries in signing two global initiatives to plan for the risks associated with climate change, as a new report reveals the cost of extreme weather i...Read more
Economy
How CSIRO plans to turn landfills into a billion-dollar industry, tripling jobs
Australia’s national science agency is saving plastics, glass, paper and tyres from landfills and turning them into a billion-dollar industry that is set to triple in job creation, an official state...Read more
Economy
COVID consequences ‘will come home to roost’
Markets are enjoying an easy ride despite the economic damage wrought by COVID-19, but “there will be a reckoning”. ...Read more
Economy
Global economy predicted to pause before soaring in 2021
2021 will provide investors the opportunity to cash in on private markets and businesses hurt, but not permanently damaged, by the pandemic as accommodating policies and pent-up demand drive global gr...Read more
Economy
5 predictions for the Australian economy in 2021
The Australian economy is tipped to be one of five nations to outshine, with a win on the health front likely to act as tailwind, a new report has revealed. ...Read more
Economy
Deloitte calls vaccine a ‘game changer’ as 77% of Aussies welcome jab
As many as three-quarters of Aussies are willing to be vaccinated once a new coronavirus vaccine becomes publicly available, new research has revealed, as Deloitte Access Economics calls the vaccine ...Read more
Economy
Markets react to Biden’s stimulus package
The US markets have reacted negatively to President-elect Joe Biden’s US$1.9 trillion ($2.44 trillion) bailout proposal, amid mass job losses as the US continues to struggle with the COVID-19 pandem...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
