Coronavirus vaccine to limit damage as economy looks up in 2021: Deloitte

While there were queues outside Centrelink in March, Deloitte says Canberra has been largely shielded from job losses due to COVID-19. Picture: Karleen Minney
While there were queues outside Centrelink in March, Deloitte says Canberra has been largely shielded from job losses due to COVID-19. Picture: Karleen Minney

The rollout of vaccines for COVID-19 will be a "game-changer" for Australia's economy, a new report from one of the country's top economic analysts says.

While Australia has largely handled the COVID-19 pandemic well, with resulting in good news for the economy, Deloitte Access Economics' latest Economic Business Outlook predicts "scars from this pandemic will linger" including in employment.

Deloitte partner Chris Richardson predicts wages and price gains will continue on a downward trend, while inflation won't start to grow until unemployment drops below 6 per cent, something that isn't predicted to happen until 2023.

"The excellent news on vaccines will probably limit the longer-term damage to Australia's population growth: migrants look likely to be back in reasonable numbers by mid-2022," Mr Richardson writes.

In a mostly positive report, Deloitte predicts gross domestic product will increase 4.4 per cent in 2021, with household spending to increase by 6 per cent.

The analysts predict accommodation and food services will bounce back, jumping 18 per cent on last year, but the predictions assume Australia's vaccine rollout will provide herd immunity by the end of 2021, with no further major outbreaks of COVID-19 domestically.

Almost 300,000 people will return to the labour force in 2021, the report predicts.

The ACT economy will grow 2.5 per cent this year, and while that prediction is lower than any other state or territory, the local economy didn't face the same challenges as others that faced bigger COVID-19 outbreaks.

According to Deloitte's analysts, the ACT's virus success has allowed life in the capital to return almost to normal, apart from the lack of international students studying at local institutions.

"It's an important sign that the ACT economy continues to grow, despite having suffered a shallower decline and faster rebound compared to most other jurisdictions," the report said.

"That is, the territory's recovery has come without the same massive pent-up demand seen around the rest of the country - much to the relief of retail, hospitality and construction."

The construction sector is powering on, and the Deloitte report found the ACT had the highest number of HomeBuilder applications as a proportion of households than any other state or territory.

Deloitte predicts the ACT's private housing investment will drop 3.9 per cent this financial year, before growing modestly in 2021-22, at a rate of 3.5 per cent, before powering ahead at 8 per cent growth the next year, before slowing significantly across 2023-24 and 2024-25.

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Mr Richardson predicts the federal government's big budget in October will have a positive effect on the ACT's overall economy.

"Big policy initiatives require large numbers of public administration employees, but so too workers in supporting industries like accommodation and food services, and arts and recreation," he said.

"A fall in the average number of weeks taken to find a job in these industries in the three months to November, compared to February, points to improving job prospects in parts of the ACT."

Not all industries in the ACT were so lucky, with jobs in transport, postal and warehousing, professional services and health care and social assistance taking longer to find.

This story Economy looking up in 2021 with vaccine in sight: Deloitte first appeared on The Canberra Times.

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