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7 factors that are driving Australia’s economic recovery

By Neil Griffiths
 — 1 minute read

Australia is experiencing a “V-shaped recovery” in regards to the economy’s growth from the COVID pandemic and there are a few key reasons why, according to Commonwealth Bank’s chief economist.

Delivering a keynote during a CEDA livestream on Tuesday, CBA chief economist and head of economic and market research, Stephen Halmarick, outlined seven factors that can be attributed to Australia’s economic recovery:

  • Control of COVID-19
  • Sharp rise in consumer confidence
  • Surge in household savings
  • Improving house market
  • Jump in domestic tourism
  • Strong resource exports
  • Increase in public sector infrastructure spending

Mr Halmarick noted the labour market’s recovery as the “most remarkable” and expects the unemployment rate, which was 5.5 per cent as of April, to be 5 per cent at end of 2021 and 4.7 per cent by end of 2022.

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“Importantly the under employment rate is now lower than it was pre-COVID,” Mr Halmarick said.

“There’s been over 900,000 jobs created since June last year and April this year. We expect another 30,000 increase in the employment number this week.”

When specifically discussing CBA customers Mr Halmarick revealed that total income hitting CBA bank accounts increased during the COVID-19 recession and estimated that Australians saved over $140 billion over 2020 and the first quarter of 2021.

Data gathered from CBA’s Household Spending Intentions series found that spendings across home buying, retail, health and fitness, entertainment and car buying all increased when comparing May 2021 to 2019 (which CBA considers a “normal year”).

“The home buying numbers [are] incredibly strong, lots of volatility in retail, travel is picking up but mostly that is domestic,” Mr Halmarick said.

“Health and fitness spending [is] very strong, entertainment held back last month compared to May last year but still picking up, as is education and motor vehicle spending.”

 

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7 factors that are driving Australia’s economic recovery
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