Raising Australia’s economic growth forecast for 2022

Good news for the Australian economy

After the Australian economy shrunk by 1.9% in the third quarter last year, due to widespread lockdowns and the Delta variant, it looks like things are set to change with a swift recovery forecast by economists. The Australian treasurer Josh Frydenberg said, “The market is coming back strongly” on the Australian Broadcast Corporation’s “Insiders” programme and this has been reflected in the raising of Australia’s economic growth forecast for 2022. The announcement was made during a mid-year budget review which suggested Australia’s economy would bounce back quicker than expected, with some experts suggesting growth over 5% in December 2022.

Increased confidence due to vaccinations

One of the big reasons for Australia’s speedy financial recovery is the success of its Covid-19 vaccination programme, which has increased buyers’ confidence and seen the return to work for many Australians. The country had some of the tightest Covid-19 restrictions in the world, and though the Omnicron variant has been detected in the country, such high vaccination rates could mean it has less of an impact. In Australia, around 88% of over-16s have been fully vaccinated and 93% have received their first dose. This puts Australia’s vaccination rates as some of the highest in the world, providing reassurance for investors and consumers.

Rising salaries and job growth

Economists are confident that despite the omicron variant, the economy will continue to recover throughout 2022. With citizens relying on the hospitality and tourist sectors, the opening up of the country means greater security for many. Experts point to record hirings after lockdown, greater spending as restrictions are eased and the opening of international borders as other reasons Australia might recover quicker after this wave. Australia still has relatively low Covid-19 case numbers, compared to other countries around the world, with around 500,000 total cases and 2266 deaths overall, which suggests their prevention strategies may have been successful. Forecasters have also been confident in wage growth, with salaries in sectors like legal services and technology rising.

The impact of the omicron variant

Though case numbers continue to stay low, there have been a rising number of Omicron cases found in Australia, though it is too early to tell whether this will affect recovery, according to the Australian treasurer. Economist, Ms Hunter from BIS Oxford Economics, said “While omicron will put a dent into momentum, it looks like it will do less economic damage than delta”. It’s also important to bear in mind that different parts of the country continue to have differing lockdown rules, with some citizens unable to travel to certain areas and strict quarantine rules for international travellers.

Get in touch

As Australia opens its borders and gets ready for economic growth, at Seamless we are dedicated to helping companies work internationally as efficiently, effectively and compliantly as possible. Our experts can create a bespoke solution for your business to help it achieve its international aims and ensure continued growth throughout 2022 so get in touch today.

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