By September 2021, long-term lockdowns had taken their toll and the Organisation for Economic Co-operation and Development predicted that the Australian economy would only manage four per cent growth in 2021, a downgrade of 1.1 per cent on its previous estimate – the biggest downgrade of any country measured.
Even though our economy outperformed the rest of the world in 2020 by only shrinking 2.5 per cent (compared to Spain’s 10.8 per cent and the UK’s 9.8 per cent), the nation was expected to lose substantial ground throughout 2022.
Continued uncertainty about how we’ll cope when all lockdowns are lifted and COVID-19 numbers begin creeping up among the unvaccinated will impact the return to ‘normality’, according to Deloitte Access Economics Partner Chris Richardson. However, he warns we shouldn’t overestimate the effects of recent lockdowns.
“Lockdowns have battered government budgets less than you’d think,” he said in October 2021. “Borrowing costs took another dive just when we need to borrow more, so Delta lockdowns and associated policy responses add just one-hundredth of one per cent of national income to ongoing annual net federal interest payments … But the bottom line for industry growth forecasts is simple: the deeper that Delta is hurting right now, the greater the rebound potential.”
Crisis of confidence
Meanwhile, the National Australia Bank Business Confidence Index has also had a roller-coaster couple of years. After plunging below –60 in early 2020, it defied expectations by springing back into positive territory within six months. In April 2021, it stood at an impressive +23 as we patted ourselves on the back for dodging the COVID-19 bullet – only to dip below zero again when cases spiked in July.
It had been following a similar trajectory to the UK and US, but they are now both firmly in the black and tracking upwards. Any smugness Australia might have felt as it avoided the catastrophic infection rates of Europe and North America evaporated when it became clear that the vaccine rollout had left a lot to be desired.
But many of the statistics and projections from financial commentators paint in very broad brushstrokes and fail to capture some of the finer details of who exactly was skewing up or down.
