Economic recovery in Australia and around the world through 2021 will be a battle between COVID-19 vaccinations and mutations, a new report from one of the country's top economic analysts says.
While rollout fumbles will cloud the global rebound, Deloitte Access Economics' latest Economic Business Outlook predicts a "virtuous circle" as COVID dangers fade through 2021 in developed nations and then through 2022 in the rest of the world.
However, two of Canberra's big industries, the public sector and education will see little growth in 2021, the report concludes. In education, more foreign students will finish their courses and go home, but very few will take their place.
"The federal government carried Australia through COVID, and so the ACT's public service got bigger. In fact the ACT often outperforms during recessions thanks to its government strengths," the report says.
"But that's rather less good news in the national recovery phase, and Canberra's recent economic success is already starting to come back to the pack."
Australia's economy appears on course to be close to pre-pandemic normal by Christmas 2021, notes Deloitte partner Chris Richardson, as the big bump that came with the country's economic reopening falls away and is replaced with a slower grind.
"Taxpayers carried us through this crisis. Now vaccinations will increasingly take that load - as they should. That's going to be a messy transition, and new sticky tape will keep coming," Mr Richardson writes.
Australia's "remarkable" job recovery will slow down with the end of JobKeeper and there will be stories of business closures and jobs lost, but Deloitte forecasts overall jobs to hold up amid ongoing momentum in the wider economy. It forecasts unemployment at 5.6 per cent by late 2021 and to 5.1 per cent by late 2023.
As businesses rebound, they might find themselves vulnerable to specific skill shortages, Deloitte warns, as caution over mutation will hold off migration until 2022.
Mr Richardson cautions the government against jumping too quickly into budget repair mode.
"The government said it wouldn't worry about repairing the budget until unemployment was 'comfortably below 6 per cent'. But we're already so successful that we should move that target closer to the 4.5 per cent unemployment rate that the RBA uses," he says.
The tale of collapsing industry is "already history", Mr Richardson says, and now sectors that felt the hardest punishment of lockdowns in 2020 will do the best in 2021.
Accommodation and food, arts and recreation, and admin services have seen rebounds already, and vaccinations will cement those gains, Deloitte predicts.
"That doesn't mean they're healthy. It just means they're out of intensive care and on the mend," Mr Richardson writes.
Farming will be the standout winner in 2021, Deloitte predicts.
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