The Australian economy will grow at its quickest rate since 2007, thanks to the huge stimulus and the fact that, unlike its other wealthy neighbor, Australia has mostly been able to restrict the spread of the new coronavirus cases. Despite the fact that most major economies are dealing with a new wave of covid cases, Australia has substantially contained the outbreak, with just roughly 30,000 local cases and 910 deaths since the epidemic began.
As a result, officials have been able to relax restrictions and accelerate the economic recovery, which was so highly anticipated. The UK economy shrank by 10% on average in 2020, while the eurozone shrank by 6%, the same statistic in the case of Japan at 5% and the US by more than 3%.
According to the official research conducted in April 2021, it was anticipated Australia’s economy would expand by 4.4 percent this year. After declining at a far slower rate than its rivals at approximately 2.5 percent last year.
As most COVID-19 restrictions are lifted, Australia’s success in the health sector, as well as the vaccine-roll-out, has allowed the economy to reopen. Consumers and mainly SMEs are optimistic and are ready to spend, with confidence at an all-time high.
The country’s jobless rate decreased to 5.6 percent in March, marking a rebound from a peak of 7.5 percent in July, when coronavirus lockdowns sent the economy into its first recession since the early 1990s.
The economy has already recovered all the jobs that were lost during the pandemic, bringing employment to a new high of 13.08 million, indicating significant growth in the months ahead. The Reserve Bank of Australia, which has made full employment a priority for its policy, will likely be more at ease as a result of the increase in jobs. Since the epidemic began, the RBA had dropped its official cash rate, and interest rates were forecast to remain just over zero for years, at least until 2022.
Inflation was also expected to be well below RBA’s upper range, which was likely to be policymakers. With wage growth unlikely to exceed 2% in the next two years, the RBA appears to be on track to keep the cash rate on hold beyond the projection horizon.
For inflation to stay sustainably within the given margins, wage growth needs to be exceeding it. It has been eight years since something like this happened and the officials do not expect inflation to rise beyond 2% until 2023, based on the projection for wages.
Trade deal with the UK
On June 15, the United Kingdom and Australia announced a free trade agreement, which the British government praised as a crucial step in forging new trade ties following the United Kingdom’s exit from the EU. because of the agreement which eliminates tariffs and decreases red tape, Britain claims that vehicles, whiskey, and confectionary will be cheaper to sell in Australia. It was a huge win for Australian agriculture as well.
The agreement is significant also due to the fact that this is the first bilateral trade agreement that Britain has signed since the approval of the Brexit agreement. This is a very crucial moment since it gives the best opportunity for the British Government to move its economic center from the EU countries into the Indo-Pacific region. Prior to 1973, when Britain joined the European single market, it was Australia’s most profitable trading partner. The entire deal has yet to be made public. According to the statements that were made by both sides, it might contribute 500 million pounds to the country’s economic output.
The deal’s greatest economic gain might be the precedent it set for more open trade, allowing the UK’s services sector to export financial legal actions. British trade minister, Lizz Truss. It is a fundamentally liberalizing agreement that eliminates tariffs on all British goods, expands the relationships for the service and IT company, let alone the fact that people will be given a unique possibility to travel and collaborate.
Britain has failed to join a trans-Pacific economic bloc, which includes other countries where ministers foresee a substantial increase in demand for digital and professional services. The comprehensive and Progressive Agreement for Trans-pacific Partnership is also considered significant economic leverage to counterweight the regional power, meaning China.
The pact with Australia will be scrutinized by British farmers, who fear that if taxes on lamb and beef imports are eliminated, they will be forced out of business. For the next 15 years, Britain’s farmers will be safeguarded by a tariff-free import quota. Australian Minister for Trade stated that the agreement would assist Australian farmers with great help that will be great for the whole agricultural industry in the country.
The national Farmers’ Union of the UK said it would like to know the specifics of the safeguards and how they would be implemented if the British market became overwhelmed with Australian products, which is considered to be the main concern in this regard.
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