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Colin Brinsden, AAP Economics and Business Correspondent
(Australian Associated Press)
It would appear Treasurer Josh Frydenberg’s repeated boasts that Australia has outperformed all major economies coming of the global recession is not just political rhetoric.
A new barometer has found Australia, along with New Zealand, leading the pack when it comes to the global fight against the negative economic and health impacts from the pandemic.
Reserve Bank governor Philip Lowe also says Australia is doing much better than most, but warned there is a missing link.
“One piece of the recovery that is yet to click into gear is business investment,” he said opening the Melbourne Business Analytics conference on Monday.
He said it was understandable that many firms deferred their investment plans during the downturn, although there was a pick-up late last year.
“But there is still a long way to go to get back to the level of investment before the pandemic, which itself was low by historical standards,” he said.
“If we are to have a strong and durable recovery, it is important that the recovery in business investment continues and broadens.”
He said investment in IT, digitisation and data science will be critical in lifting the nation’s productive capacity.
“These investments allow better decision making and a faster response to the changes in our economy and society,” Dr Lowe said.
Research modelled by consultants EY for its new Global COVID-19 Economic Index agreed that it is time for business to take up the baton of the recovery through investment.
EY Oceania chief economist Jo Masters says Australia’s strong global position should give businesses the confidence they need to invest and hire, for consumers to open their wallets, and for governments to progress productive reform.
“Federal and state governments have ploughed an unprecedented amount of fiscal stimulus into the economy, supported by the Reserve Bank of Australia,” Ms Masters said.
“The growth baton now needs to pass to the corporate sector to drive forward our continued recovery, boosting investment to stand alongside household spending as growth drivers.”
The EY Global COVID-19 Economic Index looks beyond the traditional measures of GDP and employment, and incorporates balance sheet strength across households, government, central banks, non-financial corporates and financial institutions.
Meanwhile, Mr Frydenberg returned to familiar territory in the first question time of the parliamentary sitting fortnight.
“The Australian economy’s recovery is on,” he told parliament, rattling off the falling unemployment rate, maintenance of the AAA rating, confidence returning to pre-pandemic levels and recent strong economic growth figures.
“That is something that 25 million Australians can be proud of.”
But Ms Masters warned when support measures like the JobKeeper wage subsidy end later this month, she expects there will some businesses that can’t survive and some jobs will no longer be there.
However, she believes it is time to move away from the big, broad-based support measures and instead support specific industries like those that have been impacted by the lack of international tourism.
The opening of international borders will be highly dependent on the rollout of the vaccine both in Australia and overseas.
“While it is difficult to pick the exact timing to open our borders, I think Australia remains a very desirable destination for students, importantly for skilled migrants, and for tourists,” Ms Masters told the ABC.
“I do think that we will see those three sectors come back over time.”