Why is Australia closed, hard blockade, but the economy is still bigger than before the epidemic?

A year after the Covid-19 pandemic hit the Australian economy, Ashok Ravindran – an IT contractor – had a problem: He had to decide which job he should take when three positions were offered. Ravindran’s “happy” dilemma reflects an economy that is now even larger than before the pandemic.

Australia’s “golden period”

Exports are booming, consumer and business confidence is high and hiring has exceeded expectations with employment hitting a 12-year high.

Ravindran, a Sydney resident, just quit her job two weeks ago. “The market is very hot right now. I applied to several companies to try the environment and got 3 offers,” Ravindran told Reuters, “Every place has additional offers so it’s hard to turn down because you don’t want to miss your opportunity.”

Far from dire predictions last year, Australia’s unemployment rate has slipped to pre-pandemic 5.1 per cent, home building permits hit a record, and consumer spending falters quite active.

According to Reuters, Australia’s $2 trillion economy is now bigger than it was before the pandemic. Sports events are once again attracting spectators and pubs are full. Until the time the epidemic showed signs of returning due to the appearance of the Delta strain (*), in many states and territories, masks were no longer a common item.

(*) 4 Australian cities with a total population of more than 10 million people are currently under lockdown while the government tries to control new outbreaks caused by the Delta mutation.

The implementation of the blockade, rapid tracing and the application of social distancing measures have helped Australia keep the number of infections and deaths relatively low. Up to now, the country has more than 30,000 cases and about 910 deaths.

However, the rate of vaccination against Covid-19 in Australia is relatively slow. Currently, only nearly 5% of the Australian population is fully vaccinated.

The constraints that were expected to negatively impact demand (such as the closure of foreign borders and limited domestic movement) have suddenly turned into new sources of growth. Instead of traveling to Bali or Bangkok, Australians turn to domestic vacations.

Instead of traveling to Bali or Bangkok, Australians turn to domestic vacations.

The essential requirements of working from home have led many people to decide to move to suburban areas, outside of big cities, pushing up demand in small towns. Social distancing rules have also boosted online retail sales while dine-in service has never been so popular.

“Australia is breaking records, becoming one of the fastest economic recovery cases in modern history,” said AMP Capital Manager Dermot Ryan. “The economy is benefiting from the boom in Australia. all three segments: mining, housing and corporate profits.”.

Despite being entangled in a worsening trade war with China, one of the world’s leading economies, Australia’s exports have miraculously grown thanks to soaring iron ore prices and new markets in Asia, Middle East.

Economists expect this golden period to last for a while longer.

Optimistic despite the blockade

The ability to reopen on a large scale earlier than expected and the financial and monetary stimulus has helped the Australian economy recover quickly after the country fell into recession in 2020 – the first time. for the first time in 3 decades.

These factors combined have sparked an upward real estate market, disbursing a huge amount of capital, which was previously carefully held by banks in 2020 in case the real estate bubble burst. real estate due to Covid-19.

Ryan said that both the banking and mining businesses have the potential to return more than $59 billion for investors in the next fiscal year.

Rising house prices led to a construction boom, sending shares of many manufacturers of construction products such as James Hardie and Brickworks to record highs.

Shares in Australia’s leading property lender, Commonwealth Bank, are at an all-time high. Consumers also feel confident.

Survey results consistently show that the number of optimists far exceeds the number of pessimists. Retail sales are up 25% from a year ago and vehicle sales jumped 68%. Retailing of household goods grew, led by furniture and electrical appliances, as people built new homes and remodeled a lot. Demand is so strong that the electronics and home appliance chain Bunnings is facing a shortage of wood.

Many companies are short of workers while tens of thousands of Australians are still stranded abroad.

Their fate remains undetermined as Australia pledges to close its borders until next year. This means that skilled migration – which has been the driving force behind Australia’s economy until 2019 – becomes impossible.

Although some businesses and individuals are calling for Australia to relax border controls, the decision to close the border is generally accepted by the public. Recent elections have shown that leaders who take a hard line on Covid-19 have a lot of support.

Currently, Australia is still continuing to apply the blockade strategy when there is a risk of a new epidemic. The rate of vaccination against Covid-19 vaccine in this country has only reached nearly 5%.