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Victims of our own success: Why beating virus will set back our economy until 2024

Business

Queensland business model of tourism and exports has been broken by the impacts of the pandemic and will reduce its ability to recover, according to a report from Deloitte.

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The report predicts unemployment in Queensland would remain above 7 per cent until 2024.

It said Queensland “had superb success against the virus’’ but the border closures that were part and parcel of virus success came at a notable cost to jobs given the state’s dependency on foreign and interstate visitors drawn to its sun and surf.

“And Queensland’s strengths in coal and gas have been less useful than WA’s reliance on iron ore,’’ it said.

“Queensland has done remarkably well from a public health perspective, with tough border restrictions (both international and interstate) helping to keep case numbers low.

“But the closure of international borders has ground the state’s normally bustling international tourism sector to a halt.

“Much of Queensland’s recovery lies squarely on open state and international borders. And until then, the Queensland economy will struggle to get out of third gear.”

The report said the state’s other major export, coal, has also taken a big battering.

“Coal was already on the wrong side of history, and COVID has accelerated elements of that: global demand for coking coal has weakened materially through this year due to the pandemic.

“Queensland’s ability to paper over the cracks through selling resources to the world at premium prices despite a massive global recession is proving much more challenging for the Sunshine State.”

Deloitte said that if that wasn’t bad enough, tensions between Australia and China are creating risks for the state economy and breeding uncertainty. China acts as a major source of demand for the state’s resources, tourism and international education. Were that to dry up, then the state would be in an unenvious pickle.

“On a more positive note, Queensland’s consumers appear to – slowly but surely – be regaining some mojo. This, paired with the easing of restrictions, is expected to further support household consumer spending. And with the state’s domestic borders beginning to re-open, pent-up demand is expected to accelerate the recovery, driven by those wanting to visit friends and relatives following the ‘Great Lockdown’.

“Assuming state borders open before international ones, there’s also the potential for Australians to redirect some of their plans to travel overseas to domestic locations, which would bode well for the Sunshine State.”

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