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Queensland tipped to lead nation's economic recovery as jobs 'cliff' fears fade

Business

Queensland’s economic growth will be near the top of state economies and lead Australia out of the COVID-19 downturn, according to Deloitte Access Economics.

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It has forecast Queensland to have growth of 4.6 per cent in 2021, only beaten by Victoria’s 5.3 per cent. In comparison, the Queensland Government’s historically conservative forecast is for 0.25 per cent growth in 2020-21 and 3.5 per cent in 2021-22.

But Queensland’s hard borders have come at a cost that other state’s have not had to endure.

Deloitte economist Chris Richardson also said the winding back of support measures in March, such as the JobKeeper wage subsidy, was now looking less dangerous than previously thought because the jobs market was doing so well.

This week’s latest labour force figures for December could see a decline in the jobless rate to 6.7 per cent from 6.8 per cent, a further pullback from the 7.5 per cent seen last June during the depths of recession.

“The jobs market has been very good,” Deloitte Access Economics partner and economist Chris Richardson said.
“We already have six out of every seven of the initial job losses back.”

There have been concerns about what impact the planned withdrawal of JobKeeper in March would have on employment and the economy more broadly.

The industries Deloitte favours for strong growth are the sectors in which Queensland has an advantage.

It said accommodation and food services (which includes tourism) would bounce back by 18 per cent nationally. Farming and fishing would grow by 11 per cent.

Richardson said every state had performed well during the pandemic and Queensland had been very successful in staying ahead of COVID-19.

“That’s allowed it to have a relatively open economy,” Richardson said.

“Unlike WA, however, state border closures cost it (Queensland) more given its relatively large border communities and its strong reliance on domestic tourism.”

He said the negatives ahead of Australia this year were likely to be the damage to manufacturing, housing and commercial construction, as well as discretionary spending.

The improved economic forecasts should also help state governments with their mounting debt as more spending helps their tax take.

Wages and prices were likely to remain flat and inflation may not find its lowest point until mid-2022.

“2021 looks set to continue the recovery in sectors smashed in the lockdowns and border closures of 2020, allowing the likes of accommodation, food, entertainment and airlines to continue to climb back from the abyss,” Richardson said.

“And by 2022, tourists and foreign students will be here in greater numbers.

“Business conditions AV (after vaccines) will look very different to those before vaccines.”

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