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Colin Brinsden, AAP Economics and Business Correspondent
(Australian Associated Press)
Josh Frydenberg says economic indicators are all pointing in one direction and to an Australian economy that is bouncing back strongly.
The treasurer points to recent strong results for job vacancies, home lending and retail spending in particular.
Economists too are expecting a further drop in the unemployment rate when labour force figures are released later this week.
Mr Frydenberg also took comfort from a new report from Deloitte Access Economics confirming Australia’s economic recovery.
“All these numbers point in one direction – that jobs are coming back and the economy is picking up as restrictions are eased as we are getting to the other side of this once in a century pandemic,” he told reporters on Monday.
Such has been the strength of the recovery from Australia’s first recession in nearly 30 years, Deloitte Access Economics does not expect the end of the JobKeeper wage subsidy will be as troublesome as first thought.
“It’s always going to be a dangerous phase when JobKeeper comes off,” Deloitte partner and economist Chris Richardson told AAP.
“It is genuinely looking less dangerous because we have done so well on jobs.”
Mr Frydenberg reiterated the government intends to end the JobKeeper program in March as planned.
But federal Labor argues there will be no decent economic recovery unless there is also an improvement in wages growth.
Despite all the good news on the economy, the Deloitte Access Economics quarterly business outlook released on Monday also expects wage and price pressures to keep “bumping along the bottom” for sometime.
Mr Richardson does not expect annual inflation to climb much until unemployment drops well under six per cent, which he says won’t happen until 2023. The rate was 6.8 per cent in November.
Even then, annual wage growth is not expected to climb back above two per cent until 2024.
“We welcome any encouraging signs in the economy. But for it to be a good recovery, the right kind of recovery, we need to make sure that there’s job security and wages growth for ordinary working families,” shadow treasurer Jim Chalmers told reporters in Brisbane.
“There’s no decent recovery without a recovery in wages. It’s as simple as that.”
Still, Mr Richardson says Australia is one of just five nations which entered 2021 in relatively good shape – Taiwan, China, Vietnam and New Zealand being the others.
“COVID numbers are very low, the vaccine news is excellent, confidence is rebounding, Victoria is catching up to the recovery already under way elsewhere,” Mr Richardson said.
“Australia has made many mistakes in juggling COVID but so far we’ve made fewer mistakes than most of the globe. You’d rather be here than almost anywhere else.”
Victorian Premier Daniel Andrews jumped on the report, which predicted his state leading the way in economic growth in 2021 with a rate of 5.4 per cent.
“That should be something that sees Victorians confident … that 2021 is going to be a very different year than 2020,” he told reporters in Melbourne.