Jan 27 2021
Leading industry research company IBISWorld has published an in-depth breakdown of how the COVID-19 pandemic is affecting every subdivision in the economies of Australia and New Zealand. This report, compiled by a team of senior industry analysts, classifies the level of disruption for each subdivision, and provides analysis on the key factors that have determined performance over 2019-20, and will affect each subdivision in 2020-21 and beyond.
The ongoing COVID-19 pandemic has had a significant and growing influence on domestic and international economic activity. Australia and New Zealand have been relatively successful in containing COVID-19 compared with other regions. However, supply chain disruptions, and ongoing travel and tourism restrictions continue to hinder Australia and New Zealand. Overall, the virus’ impact on economic activity has been highly damaging, leading to the first technical recession in Australia since 1991-92.
‘IBISWorld has classified the degree of impact for each subdivision as moderate, high or very high. The level of disruption depends on the degree of exposure to international trade, and the impact on business and consumer confidence,’ said Senior Industry Analyst Matthew Reeves.
COVID-19 has negatively affected the Australian and New Zealand economies by disrupting consumer demand and business supply. However, economic conditions have now improved in both countries following the successful containment of COVID-19. As at January 22nd, only eight cases of COVID-19 were acquired locally in Australia over the prior week. In New Zealand, there has been no local community transmission of COVID-19 since November 18th 2020. The near-elimination of COVID-19 has enabled a significant relaxation of social distancing restrictions over the past two months, including the reopening of major state borders. Face masks remain mandatory in some contexts in Victoria.
Households scaled back discretionary spending during the first months of the pandemic due to fears relating to rising unemployment and economic uncertainty. Household consumption expenditure is expected to decline by 0.4% in 2020-21. However, household spending is expected to strengthen in the first half of 2021, as the reopening of interstate borders and relaxation of social distancing measures encourage economic activity.
Many businesses have abandoned or postponed investment in new productive capacity to retain cash and provide a liquidity buffer to survive the COVID-19 pandemic. Supply chain disruptions in Australia and New Zealand, and in foreign markets continue to hinder business activity, dampening the economic recovery.
Some subdivisions have outperformed during the COVID-19 pandemic. Social distancing has pushed many consumers to online channels for shopping, communication, food purchases and working arrangements. This trend has driven a surge in sectors such as online shopping, postal services, and data storage services. Some industries in the Mining subdivision have benefited from declining operating costs associated with lower fuel prices. Other industries have suffered direct negative effects, but have also seen positive factors, such as rising demand for repairs and maintenance services replacing new purchases.
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For more information, to obtain industry reports or to arrange an interview with an analyst, please contact:
Strategic Media Advisor – IBISWorld Pty Ltd
Tel: 03 9906 3647