Australia: Macroeconomic Country Outlook
- GlobalData forecasts real GDP to grow by 3.8% and household consumption expenditure by 2.5% in 2022.
- Australia was ranked 22nd out of 136 nations in the GlobalData Country Risk Index (GCRI) Q4 2021.
- According to GlobalData, Australia’s output in the wholesale, retail trade and hotels sector is expected to grow by 3.3% over 2022-24, in nominal terms.
PESTLE Summary
- Political: Australian government implemented key policies to support recovery from COVID-19 crisis. The government quickly reacted with a slew of policies to combat the spread of COVID-19 and facilitate economic recovery. According to government sources, the 2021-22 Budget committed an additional $41 billion in direct economic support, bringing total support since the beginning of pandemic to $273.9 billion, as of January 2022. Rapidly expanding vaccination coverage is expected to facilitate continued recovery in 2022. The Reserve Bank of Australia (RBA) kept the cash rate unchanged at 0.1% in the December 2021 announcement, marking a full year with the lowest possible central bank base rate.
- Economic: Solid domestic consumption demand, increasing infrastructure investments, and public investments are an engine for growth. Australia’s real GDP grew by 4.0% in 2021. The household consumption expenditure growth stood at 13.8% in 2021, up from -6.2% in 2020. GlobalData expects continued recovery in 2022, with the real GDP to register 3.8% growth and household consumption to grow by 2.5%. The unemployment rate dropped from 6.5% in 2020 to 5.3% in 2021, which is an indication of economic recovery, especially in the manufacturing and trade sectors. Public investments, along with a boost to infrastructure, will aid economic growth. Furthermore, the construction and mining segments of the country are forecasted to grow in the coming years.
- Social: 2020–25 National Health Reform Agreement (NHRA) to outline the roadmap for long-term health reforms in Australia. The NHRA 2020–25 was launched in May 2020, which is an agreement between the Australian government and all state and territory governments that commit to improving health outcomes for Australians, by providing better coordinated and joined up care in the community and ensuring the future sustainability of Australia’s health system. It is the key mechanism for transparency, governance and financing of Australia’s public hospital system. The NHRA outlines how governments will work together to provide high-quality services. The Australian government plans to contribute about $133.6 billion between July 1, 2020, and June 30, 2025, for public hospital services.
- Technological: 5G network services to expand significantly across Australia by 2025. Telstra, Optus, and Vodafone have all officially switched on their 5G networks in Australia, and these telecom operators plan to rapidly exchange their coverage across the country in the coming years. As of October 2021, Telstra's 5G network covers over 75% of the Australian population, with the goal of hitting 95% of the population by 2025. Its coverage spans Melbourne, Sydney, Canberra, Brisbane, Adelaide, Perth and Hobart. Optus’s5G network coverage is available in several locations, including parts of Sydney, Canberra, Melbourne, Brisbane, Adelaide and Perth.
- Legal: New ‘anti-trolling’ law introduced by the Australian government to protect citizens from online abuse. In November 2021, the Australian government announced a landmark ‘anti-trolling’ legislation to protect citizens from online abuse. It aims to do so by unmasking individuals who use the anonymity afforded by the internet to harass people. Under the law, social media companies must disclose information about individuals behind troll accounts so that people on the receiving end of harassment can sue them for defamation. If companies fail to do so, they would be considered publishers and can be held liable for defamatory comments posted on their platforms. If passed by Parliament, the new law would allow victims of defamatory online comments to resolve disputes by using a new complaints process of the social media platform to demand removal of remarks and identification of trolls.
- Environmental: Significant improvement in renewable energy generation. According to the Department of Industry, Science, Energy and Resources, in 2020, 24% of Australia’s total electricity generated came from renewable sources such as wind (9%), solar (9%), and hydro (6%). According to International Energy Agency, Australia leads the world in per capita uptake of solar power, which stood at 22% for Australia in 2020. The Australian government plans to reduce the country’s GHG emissions by 26-28% below 2005 levels by 2030 through its Direct-Action Plan. In January 2022, renewable energy developers, X-Elio and Maoneng, received green light for two rural electrification projects in Australia. X-Elio reached a financial close for its Blue Grass Solar Farm at Columboola in Queensland's Western Downs. Maoneng also received the green light for an energy project on Victoria's Mornington Peninsula.
Key Fundamentals
Macroeconomic Outlook
- Australia’s well-established fiscal framework and channels of distribution have helped the country avoid recessions during global crises before the COVID-19 pandemic. As of January 2022, the government and central bank have announced stimulus support of 20.4% of GDP, amounting to $273.9 billion. The country has ample fiscal space to support the economy through a recession until recovery. Although there are significant challenges to the Australian economy, the robust macroeconomic framework has supported it.
- The government plans to invest AUD110 billion ($82.7 billion) over a period of 10 years as a part of the Federal Government’s Economic Recovery Plan. In the 2021–22 budget, the government committed an additional AUD15.2 billion ($11.4 billion) towards new infrastructure projects, across Australia, which is expected to support around 30,000 jobs across the nation.
- In the 2021–22 budget, the government announced Agriculture 2030, through which the government expects the agricultural industry to reach AUD100 billion ($75.1 billion) in production by 2030.
GlobalData Country Risk Index (GCRI) - Q4 2021
Australia was ranked 22nd out of 136 nations in the GCRI Q4 2021. The country’s score is in the very low risk nations band (below 30). Australia’s overall risk score is lower than Asia Pacific and the world average in GCRI Q4 2021. As per the GCRI scores, Australia performed better than the Asia-Pacific region on the parameters of macroeconomic risks, political environment, legal environment, technology and infrastructure, and environmental risks. Australia only lagged in the category of demography and social structure effectiveness when compared to the Asia Pacific.
GCRI Methodology
GlobalData’s unique Country Risk Model determines the existing and future level of country risk by assessing various qualitative and quantitative factors. The index is designed to help firms formulate their global business strategies based on historical developments in an economy.
The Country Risk Index incorporates the latest available macroeconomics, political, social, technological, environmental, and legal data from a range of recognized national and international statistical sources and incorporates proprietary data from GlobalData. Countries in the Asia-Pacific region, in this publication, include China, Hong Kong, India, Indonesia, Japan, Malaysia, the Philippines, Singapore, South Korea, Thailand, Vietnam, Taiwan, Australia, and New Zealand.
About the report
GlobalData Macroeconomic Outlook report is designed to provide detailed macro-economic analysis which will help clients in their business planning, investment and strategic decisions, and analysis. It also provides a quick view of the current situation and the risk score of the country in comparison to region and world based on the proprietary risk framework. The report also highlights key strengths, weaknesses, opportunities, and threats in each of the pillars of PESTLE, economic growth prospects, and key events which can impact the country’s future outlook.
More details: Australia PESTLE Insights – A Macroeconomic Outlook Report
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