More jobs, surging house prices, record stock values, rising inflation and a trillion dollar debt bill. Two years since Australia officially recorded its first case of COVID-19 on January 25, the economic report card is not what most experts predicted at the time.
Paradoxically, Australia’s economy is in a stronger position than before the pandemic, at least by some key measurements.
Former Treasury economist Steven Hamilton, a visiting fellow at the Australian National University’s Tax and Transfer Policy Institute, says it’s the “silver lining” of the pandemic.
“It would have been crazy to think this two years ago, but arguably the economy looks better coming out of COVID than it did heading into COVID,” Hamilton says.
Unemployment is 4.2 per cent, versus 5.3 per cent in January 2020. House prices are about 30 per cent higher. The S&P/ASX 200 is above 7000 points.
Underlying inflation has picked up to be inside the Reserve Bank of Australia’s 2-3 per cent target band for the first time in six years.
Nevertheless, there have been enormous costs imposed on individuals and businesses.
Substantial economic activity was lost during lockdowns and the economy is smaller than it would have been had the pandemic not struck.
Future federal and state taxpayers face debts that are about $1 trillion higher due to stimulus spending and lost tax revenue.
“It’s not free,” Hamilton says. “We shouldn’t pretend the pandemic wasn’t costly.”
“But we’ve had a better economic performance than almost any other country and I give them full marks on the economic side.”
In some respects, the world was lucky that the pandemic hit when global inflation was subdued and interest rates were low.
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