Australia is beginning the year from a “strong base”, according to Vanguard, with output likely to return to pre-pandemic levels by the third quarter of 2021.
In its 2021 economic and market outlook, the firm said there had unevenness in the handling of the COVID-19 pandemic among major economies.
However, Australia had done well thanks to the low number of cases as well as China which was already recovering.
“In Australia, 2021 starts from a relatively strong base supported by lower virus incidence and sustained policy support with growth of around 4% likely to see output return to pre-pandemic levels by Q3 2021,” Vanguard said.
Unsurprisingly, the major deciding factor for 2021 would be COVID-19 vaccine development and how quickly it could be rolled out to populations. This would allow for more people to return to work and for travel to open up again, simultaneously boosting economies.
Australia, which relied heavily on both tourism and international students, had held its international borders closed since March 2020 and interstate borders were also periodically closed during the year.
“Our baseline forecast assumes that an effective combination of vaccine and therapeutic treatments should ultimately emerge to gradually allow an easing of government restrictions on social interaction and a lessening of consumers’ economic hesitancy,” it said.
“But the recovery’s path is likely to prove uneven and varied across industries and countries even with an effective vaccine in sight. It will be some time before many economies return to their pre-COVID levels of employment and trend output.”
