The Commonwealth Bank’s head of Australian economics Gareth Aird said he still expected GDP to contract by 3.3 per cent in 2020, but there would be a much stronger recovery in 2021.

Aird said the Depression-like economy had been ringfenced in the second quarter of 2020 and he has forecast growth of 4.2 per cent in 2021, up from the previous estimate of 2.5 per cent and 3.8 per cent in 2022.

The CBA forecasts adds to others pointing to a far better outcome than would have been the case if Australia had not contained COVID-19.

Business confidence in Queensland has also lifted, but still retains the bottom ranking among the states. Real estate is also strengthening.

The ASX has also picked up but is still 4 per cent down for the year to date.

Aird said he was optimistic about the strength and duration of the economic recovery and said there was “plenty of evidence creeping into the data that signals strong outcomes next year are more likely than not”.

“Provided transmission of COVID-19 in Australia remains low, particularly community transmission, the strength of the economic recovery in 2021 will surprise many,” he said.

“We believe the metaphorical bridge has been built very well and sets Australia up for a prosperous next two years.”

“When GDP and employment collapsed in Australia over the second quarter of 2020 comparisons were made with the Great Depression.

“We had not seen such a sharp deterioration in economic data since the 1930s. But the similarities between the Great Depression and the COVID-19 pandemic from an economic perspective only pertain to the Q2 20 activity data.

“There is not much about the Australian economy in 2020 that is analogous to the Great Depression, particularly the huge monetary and fiscal support injected into the economy.

“The Government’s fiscal support packages were designed to keep as much of the economic furniture intact so that when restrictions were eased activity could rebound swiftly.

“It is clear that the economic data at the national level has improved since the middle of the year. Indeed we expect a decent bounce in GDP over the second half of this year to show up in the third quarter  2020 and the fourth quarter 2020 national accounts.”