The end of widespread lockdowns and a resumption of semi-normal economic activity now appears to be a promising sight on the horizon. At the end of August 2021, 34.4% of all Australians aged over 16 were fully vaccinated and 58% had received a first dose. As vaccination ramps up towards the end of 2021, IBISWorld has investigated how Australia is situated for the looming global economic recovery.
Australians remain optimistic, but less than before
Both business confidence and consumer sentiment are expected to weaken slightly in 2021-22, due to the prolonged disruption of severe lockdown restrictions in New South Wales and Victoria. However, both of these economic indicators are expected to remain positive overall. The rollout of vaccines and subsequent easing of lockdown restrictions are expected to improve sentiment in the first half of 2022. In addition, strong growth in residential property prices is anticipated to give home-owning Australians cause for financial optimism.
IBISWorld forecasts business confidence to continue improving in 2022-23. Growth in total business profit is expected to boost business confidence over the year, encouraging future business investment. However, this forecast largely depends on the ongoing vaccine rollout and may be negated by the emergence of vaccine-resilient variants of COVID-19.
Tourism reawakens at last
Throughout the pandemic, many Australian industries have either remained open for extended periods or had brief periods of operation between lockdowns. In contrast, the Tourism industry has remained in a state of hibernation amid the ongoing closure of both domestic and international borders. In the first half of 2022, tourism is expected to finally re-emerge.
IBISWorld forecasts the total number of domestic visitor nights to increase by 7.2% during 2021-22, to 352.1 million visitor nights. This rise represents the first growth since 2018-19, when domestic visitor nights reached over 400 million.
According to Tourism Research Australia, over 40% of domestic visitor nights are typically for holiday or leisure purposes, and over 30% are for visiting friends and relatives. When borders reopen, pent-up demand to reconnect with friends and family is expected to drive strong demand for the Domestic Airlines, Hotels and Resorts, and Motels industries. In addition, many households have accumulated savings over the past two years due to reduced expenditure on transport, hospitality, and retail. Combined with improved sentiment, these factors are anticipated to drive a significant uptake of domestic tourism when restrictions ease.
IBISWorld expects the number of international tourist visitor nights to increase by 813.5% during 2021-22, to 45.7 million nights. This represents a significant increase from the low of 5.2 million recorded in 2020-21, but remains well below the peak of 290.4 million in 2018-19. Some border controls will likely remain in place until global COVID-19 vaccine rates begin to contain the virus. Restrictions such as mandatory 14-day quarantine periods may remain in place for travellers from high-risk locations, limiting growth for inbound tourist visitor nights in 2021-22.
Growth outlook, for both transmission and the economy
While the rate of COVID-19 transmission continues to rise in New South Wales, widespread lockdown restrictions may soon come to an end. According to the Federal Government’s national reopening plan, which has been based on modelling by the Doherty Institute, restrictions are expected to ease when 70% of the population aged over 16 becomes vaccinated. Despite this national plan, some states governments are expected to be conservative in the speed at which they lift restrictions.
While significant restrictions remain in place, industries are showing the first signs of turning their focus away from survival and towards recovery. GDP is expected to surge by 3.5% in 2021-22, and grow by 3.0% in the following year. Although industries will certainly benefit from restrictions being lifted by Christmas, the associated reduction in government support will present a significant challenge to many struggling businesses in the months ahead.
IBISWorld reports used to develop this release:
- Finance in Australia
- Hotels and Resorts in Australia
- Serviced Apartments in Australia
- Motels in Australia
- Restaurants in Australia
- Cafes in Australia
- Pubs, Bars, and Nightclubs in Australia
- Construction in Australia
- General Warehousing and Cold Storage in Australia
- Postal Services in Australia
- Domestic Airlines in Australia
- International Airlines in Australia
For more information, to obtain industry reports, or arrange an interview with an analyst, please contact:
Jason Aravanis
Strategic Media Advisor – IBISWorld Pty Ltd
Tel: 03 9906 3647
Email: mediarelations@ibisworld.com
