Business

Australia joins the exclusive club as growth surpasses pre-pandemic peak


The Australian economy has fully recovered from the Covid-19 recession, growing 1.8 per cent in the first three months of 2021 compared to the previous quarter thanks to a rebound in business investment and an increase in iron ore exports.

Better-than-expected growth means the economy is now 0.8 percent larger than it was before the coronavirus was first detected in China in December 2019. lift Australia in a selection of countries that have grown over the past 15 months.

But economists have warned the slow pace of vaccine rollouts in the country and the Covid-19 outbreak in Melbourne, which has led to the lockdown of Victoria, poses a risk to the recovery and will dampen growth.

“Australia is in a rarity here,” said Christian Colding, an economist at Deloitte Access Economics. “Only five other countries can boast a larger economy now than it was before the pandemic. We achieved that goal while keeping Covid numbers lower than almost anywhere else.”

Australian authorities’ successful crackdown on Covid-19 and stimulus measures boosted business confidence, leading to a 5.3 per cent increase in private investment in the March quarter.

Business investment was led by an 11.6 percent increase in machinery and equipment, the strongest increase since the December quarter of 2009. Housing investment jumped 6.4 percent from the previous quarter.

On an annual basis, GDP increased by 1.1 percent. Economy slept 3.2 percent in the December quarter compared to the September quarter.

Australia’s recovery was boosted by higher commodity prices, particularly iron ore, with terms of trade – a measure of export prices relative to import prices – rising 7.4 percent in the first quarter. This pushed the country’s current account surplus to a record A$18.3 billion ($14.2 billion) in the March quarter.

Trade tensions with China, sparked by Canberra’s call to investigate the origins of Covid-19 outbreak in Wuhan, failed to discourage exports with Beijing unable to provide alternative supplies of steelmaking components.

Only Australia, China, Chile, Romania, South Korea and Lithuania have grown their economies since Covid-19 struck, according to research by Deloitte Access Economics. The report said the economies of the Organization for Economic Co-operation and Development, a group of wealthy nations, were on average 2.7 percent smaller than they were before the pandemic.

However, the virus remains a challenge. On Wednesday, authorities extended a seven-day lockdown to Melbourne to contain a cluster while only 4.4 million of the total 40 million presses needed to cover the country’s 25 million people were managed.

“Countries’ relative economic performance will depend more than anything else on how quickly a population is vaccinated,” said Saul Islick, a fellow at the University of Tasmania.

“And on this front, we are far behind the UK, the US, Canada and even most of the European continent. So it is by no means guaranteed that we will remain at the top of the group.”

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