(Reuters) – Australia’s economy, which entered 2021 in better shape than most of its peers, will gain further momentum from the successful domestic suppression of the coronavirus pandemic and supportive policies, according to a Reuters poll of economists.
Coronavirus-led lockdowns that began in March last year tipped the economy into its first recession since the early 1990s, breaking one of the world’s longest growth streaks.
But Australia has been relatively successful in curbing the pandemic and largely reopened its economy, resuming activity, domestic traveling and consumer spending.
The Jan. 12-20 Reuters poll of 34 economists forecast Australia’s A$2 trillion ($1.55 trillion) of gross domestic product would expand 3.5% this year – the fastest since polling began for the year in April 2019, although slower than the government’s growth projection of 4.5% – after contracting 3.0% last year.
“We see the recovery continuing, assisted by aggressive policy accommodation, both monetary and fiscal, and continuing growth in Asia. We assume vaccine roll-out will commence in February,” said Andrew Ticehurst, economist at Nomura.
“While the broad outlook is favourable, with unemployment set to rise much less than earlier feared, we expect the recovery to be somewhat constrained by continuing Australia/China tensions and weak population growth, given ongoing travel restrictions.”
Goods exports to China declined nearly 10% to a four-month low in November as diplomatic tensions with Beijing saw the world’s second-biggest importer impose heavy tariffs on imports of Australian coal, beef, barley and wine.
Iron ore – Australia’s top export and a critical ingredient for China’s massive steel sector – has so far been spared, but if China finds alternative sources, as it has for other goods, it could be very damaging.
