Australia’s economic recovery is going to be faster and stronger than previously expected, according to Commonwealth Bank’s Head of Australian Economics Gareth Aird.
In analysis released earlier today, Mr Aird revised the profile for Gross Domestic Product (GDP).
Mr Aird said while he still expects GDP to contract by 3.3 per cent in 2020, he now expects to see a much “stronger recovery in 2021”, with a GDP growth prediction of 4.2 per cent in 2021 (up from the previous estimate of 2.5 per cent) and 3.8 per cent in 2022.
“When GDP and employment collapsed in Australia over Q2 20 comparisons were made with the Great Depression,” he said.
"We had not seen such a sharp deterioration in economic data since the 1930s. But the similarities between the Great Depression and the COVID-19 pandemic from an economic perspective only pertain to the Q2 20 activity data.
“There is not much about the Australian economy in 2020 that is analogous to the Great Depression, particularly the huge monetary and fiscal support injected into the economy.
“The Government’s fiscal support packages were designed to keep as much of the economic furniture intact so that when restrictions were eased activity could rebound swiftly. It is clear that the economic data at the national level has improved since the middle of the year. Indeed we expect a decent bounce in GDP over the second half of this year to show up in the Q3 20 and Q4 20 national accounts.”
Mr Aird said he was “optimistic” about the strength and duration of the economic recovery and said there was “plenty of evidence creeping into the data that signals strong outcomes next year are more likely than not”.
“Provided transmission of COVID-19 in Australia remains low, particularly community transmission, the strength of the economic recovery in 2021 will surprise many,” he said.
“We believe the metaphorical ‘bridge’ has been built very well and sets Australia up for a prosperous next two years.”
Source
Commonwealth Bank of Australia, Global Economic & Markets Research report “The Australian economic recovery will be strong – we upgrade our forecasts”, published 13 November 2020, author Gareth Aird. Full Global Economic & Markets Research disclaimers can be found at www.commbankresearch.com.au.
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