Who would have thought… having started 2020 with an outlook of doom and gloom,figures released in last month showed that the Australian economy actually grew by 3.3% in the July September quarter!
What’s more, it is expected to have grown again in the October to December quarter.
Household consumption was the main driver of growth in the July September quarter, which officially drew an end to our most recent recession. Our growth during this time was, in fact, the largest quarterly increase since 1976, coming right on the back of a 7% contraction in the April to June quarter – the largest quarterly fall on record. Go figure!
The growth we’ve seen has been enabled by substantial policy stimulus implemented by the Australian and state governments, along with the Reserve Bank’s support of the banking economy.
But don’t get too excited just yet. Philip Lowe, the Reserve Bank Governor has warned that while a recovery in economic activity is underway, we do have a long and bumpy ride ahead of us.
“There is still a high degree of uncertainty about the outlook,” he said. “What has become clearer, though, as time has passed, is that Australia is likely to experience a run of years with unemployment too high and wage increases and inflation too low, leaving us short of our goals”.1
Furthermore, he noted that Australia’s economic activity is, unfortunately, proceeding at an uneven pace. While mandated and voluntary social distancing restrictions constrained some industries – particularly in hospitality and tourism – these restrictions are finally easing and experiencing sharp growth as consumers embrace the opportunity to get out, eat out and travel about. However, other industries aren’t yet feeling the love – in fact they’re being brought down by the effects of the broader economic downturn.
As we see, every business is different. While some will be considering closing down, others will see opportunities for acquisition and expansion. Most important though is the need to make the current environment a catalyst to reassess your current position and your strategy for growth. What needs to change?
There is only so far that fiscal announcements, employment and training incentives, and income support can take us. Going forward, the near-term economic outlook is dependent on finding a vaccine to protect us against the spread of COVID-19, as well as advances in medical treatment. Fingers crossed this will happen in 2021 and we can all move forward with confidence.
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Managing a business during volatile times is more time consuming than ever, however, growth remains possible. At the Ayers Group, we have experts on hand and customised payroll solutions to take the weight off your administrative requirements so you can focus on business development. We can also introduce you to experts in accounting, financial planning and more. Contact an expert from the Ayers Group today.
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