In the June quarter, the Australian economy increased by 0.7 percent, slowing from the months before the Delta strain swept wildly throughout New South Wales and Victoria.
The figure, reported on Wednesday by the Australian Bureau of Statistics, implies Australia has escaped a technical recession for the time being, ahead of a significant contraction in the September quarter owing to lockdowns in its two most populous states.
Is Australia set to enter a recession in 2022?
To say the least, the previous two years have been tumultuous, and while Australia’s economy appears to be thriving, the country’s economy normally follows a five-year economic cycle that includes both ups and downs.
A recession is defined as a period of negative growth for two-thirds of a year (six months). Surprisingly, Australia has not experienced a recession since the 2008 Global Financial Crisis (GFC).
Although, given the current state of ambiguity, it is vital to consider it a possibility.
Is a recession expected in 2021?
Unfortunately, a worldwide economic recession in 2021 appears to be a foregone conclusion. The coronavirus has already wreaked havoc on businesses and economies around the world, and experts predict that the devastation will only get worse. Fortunately, there are methods to prepare for a downturn in the economy: live within your means.
What is the state of the Australian economy in 2021?
- The Australian economy expanded in the fourth quarter of 2021. When compared to the September quarter of 2021, GDP climbed by 3.4 percent in the December quarter. The Australian economy was 3.4 percent larger at the end of 2021 than it was before the pandemic began (December quarter 2019).
- The states most affected by Delta wave limits experienced the fastest growth. New South Wales (6.7 percent), Victoria (3.7 percent), and the Australian Capital Territory (1.9 percent) had the most demand growth in the December quarter as limitations were removed.
- We went out and shopped after the limitations were gone. Household spending climbed by 6.3 percent, with non-essential spending increasing the most (14.2 percent – the largest increase on record). Essential spending such as shelter and food, on the other hand, increased by 1.9 percent.
- Households now have more money than they did before the outbreak. Households continued to preserve a greater-than-usual percentage of their disposable income (13.6 percent), which is still higher than pre-pandemic levels, though down from 19.8% in the September quarter 2021.
- As more people got haircuts, the demand for personal services expanded. Production increased in the most restricted industries compared to the September quarter of 2021. The fastest-growing industry was air transportation (56.5%), followed by lodging and food services (26.1 percent ). Personal and other services (which includes hairdressing and beauty salons) rose by 15.4%, the fastest quarterly gain in the industry’s history.
- In 2022, house construction has slowed marginally, but corporations are poised to invest. Investment in housing, including new building and renovations, declined by 2.2 percent, but was still 5.3 percent higher than the same period previous year. Following significant growth in the first half of 2021, private company investment slowed. Businesses, on the other hand, aim to dramatically expand their investment, with capital expenditures predicted to rise by 10.8% in 202223.
- During the quarter, international trade slowed. Coal exports declined as a result of bad weather that made extraction difficult. Cereal exports, on the other hand, increased dramatically due to favorable growing circumstances. Total exports declined by 1.5 percent more than imports (0.9 percent ).
- Governments in Australia have continued to support the economy. Government income assistance to households was $6.9 billion greater than pre-pandemic levels in October, down $4.8 billion from September, while government subsidies were $8.8 billion higher.
- The Australian labor market has remained strong. The unemployment rate in December 2021 was 4.2 percent, the lowest since August 2008. Western Australia, South Australia, and Tasmania had the lowest unemployment rates. Across the country, more than 13 million individuals were employed.
- Wage growth has slowed in recent months. During the December quarter, the Wage Price Index increased by 0.7 percent, putting it 2.3 percent higher than the same period last year. Wage growth ranged from 0.3 percent for educators to 1.2 percent for retail workers throughout the quarter.
- Domestic price pressures grew stronger. Consumer prices increased 1.3 percent in the December quarter, bringing them to 3.5 percent higher than the same period the previous year. The most significant price increases throughout the quarter were for new homes and gasoline.
- The effects of Omicron on the Australian economy will be most noticeable in 2022. The Omicron variation had limited economic impact in the December quarter, with the new restrictions only affecting a few weeks in the final three months of 2021.
What will the Australian economy look like in 2022?
However, our base scenario is that the Australian economy recovers rapidly following a sluggish (virus-affected) start to 2022, with unemployment falling below 4% by the end of the year and continuing to decline into 2023. Wage and price pressures are projected to stay high until late 2022, when they will stabilize. By 2023, the AUD is expected to settle around its long-run average of USD 75 cents, and house price growth is expected to slow in late 2022 before declining in 2023.
The year’s major theme will be economic policy. Regardless matter who wins the election in 2022, fiscal spending will remain high, boosting consumer demand in late 2022, but the budget will eventually need to be repaired. There are also concerns about monetary policy. While we believe the RBA will begin to adjust rates in late 2022 as a result of wage and price pressures, a lot depends on what is determined to be transitory on the inflation front and whether the RBA sticks to its guidance of waiting for hard evidence of inflation that is sustained within the band. This isn’t a simple undertaking, especially given the current supply-side pressures at work. Many of the elements that will likely feed into the RBA’s framework for assessing stable inflation and determining where rates should be to maintain inflation low and stable are difficult to assess in real time. One of these factors is the genuine level of full employment and how quickly any tightening in the labor market translates into quicker pay growth.
In the medium future, an emphasis on productivity growth and corporate investment, as well as population expansion, will most likely be the topic. As fiscal and monetary policy support fades and fiscal restoration begins, these considerations will become increasingly relevant.
Is the Australian economy robust?
According to the International Monetary Fund, Australia’s economy will grow to become the world’s 13th largest in 2022. The nominal GDP of Australia is expected to be approximately A$2.1 trillion (US$1.7 trillion). Although Australia has only 0.3 percent of the world’s population, it accounts for 1.6 percent of worldwide GDP.
What should I put away in case of economic collapse?
Having a strong quantity of food storage is one of the best strategies to protect your household from economic volatility. In Venezuela, prices doubled every 19 days on average. It doesn’t take long for a loaf of bread to become unattainable at that pace of inflation. According to a BBC News report,
“Venezuelans are starving. Eight out of ten people polled in the country’s annual living conditions survey (Encovi 2017) stated they were eating less because they didn’t have enough food at home. Six out of ten people claimed they went to bed hungry because they couldn’t afford to eat.”
Shelf Stable Everyday Foods
When you are unable to purchase at the grocery store as you regularly do, having a supply of short-term shelf stable goods that you use every day will help reduce the impact. This is referred to as short-term food storage because, while these items are shelf-stable, they will not last as long as long-term staples. To successfully protect against hunger, you must have both.
Canned foods, boxed mixtures, prepared entrees, cold cereal, ketchup, and other similar things are suitable for short-term food preservation. Depending on the food, packaging, and storage conditions, these foods will last anywhere from 1 to 7 years. Here’s where you can learn more about putting together a short-term supply of everyday meals.
Food takes up a lot of room, and finding a place to store it all while yet allowing for proper organization and rotation can be difficult. Check out some of our friends’ suggestions here.
Investing in food storage is a fantastic idea. Consider the case of hyperinflation in Venezuela, where goods prices have doubled every 19 days on average. That means that a case of six #10 cans of rolled oats purchased today for $24 would cost $12,582,912 in a year…amazing, huh? Above all, you’d have that case of rolled oats on hand to feed your family when food is scarce or costs are exorbitant.
Basic Non-Food Staples
Stock up on toilet paper, feminine hygiene products, shampoo, soaps, contact solution, and other items that you use on a daily basis. What kinds of non-food goods do you buy on a regular basis? This article on personal sanitation may provide you with some ideas for products to include on your shopping list.
Medication and First Aid Supplies
Do you have a chronic medical condition that requires you to take prescription medication? You might want to discuss your options with your doctor to see if you can come up with a plan to keep a little extra cash on hand. Most insurance policies will renew after 25 days. Use the 5-day buffer to your advantage and refill as soon as you’re eligible to build up a backup supply. Your doctor may also be ready to provide you with samples to aid in the development of your supply.
What over-the-counter drugs do you take on a regular basis? Make a back-up supply of over-the-counter pain pills, allergy drugs, cold and flu cures, or whatever other medications you think your family might need. It’s also a good idea to keep a supply of vitamin supplements on hand.
Prepare to treat minor injuries without the assistance of medical personnel. Maintain a well-stocked first-aid kit with all of the necessary equipment.
Make a point of prioritizing your health. Venezuelans are suffering significantly as a result of a lack of medical treatment. Exercise on a regular basis and eat a healthy diet. Get enough rest, fresh air, and sunlight. Keep up with your medical and dental appointments, as well as the other activities that promote health and resilience.
What does the Australian economy’s future hold?
Based on the IGR’s estimates regarding the three Ps, Australia’s real GDP is expected to increase at a 2.6 percent annual pace from 2020-21 to 2060-61, signifying a 0.4 percentage point slowdown compared to the previous 40 years.
What is Australia’s primary revenue source?
The service sector, which accounted for 62.7 percent of GDP in 2017 and employed 78.8 percent of the workforce, is the backbone of the Australian economy. With a total projected value of US$19.9 trillion in 2019, Australia has the tenth largest total estimated value of natural resources.