Nation's fastest rebound forecast for Victoria after doldrums of 2020

Nation's fastest rebound forecast for Victoria after doldrums of 2020

Victoria had the worst economy in Australia in 2020 "by far" according to Deloitte Access Economics, but is forecast to record the country's fastest economic growth in 2021 at 5.4 per cent.

Deloitte's latest Business Outlook Report says it would be a "mug's game" to claim different approaches to COVID-19 from Australian states were better or worse than others, with every state and territory well positioned to continue recovering in 2021.

"Victoria chose the hammer over the dance. The hammer worked, but the risk was the harder hit to its economy would delay recovery," the report said.

"So it's superb news that Victoria's recovery to date has been remarkable.

"And NSW has danced divinely, successfully using its tracing capabilities as a shield of steel, and so allowing it to outperform the national economy."

In terms of forecast growth rates, Victoria is ahead of Queensland (4.6 per cent), New South Wales (4.4 per cent), Western Australia (3.5 per cent), South Australia (3.4 per cent), Tasmania (3.4 per cent), the Northern Territory (3.2 per cent) and the Australian Capital Territory (2.4 per cent).

"Australia is one of just five nations - Taiwan, China, Vietnam, New Zealand and ourselves - who enter 2021 very well-placed," the Deloitte report exclaimed.

COVID numbers are very low, the vaccine news is excellent, confidence is rebounding, Victoria is catching up to the recovery already underway elsewhere, there are heartening developments in job markets, and China's trade war with Australia has so far at least actually added to national income rather than hurt it."

Victorian Treasurer Tim Pallas described the assessment as welcome news, supporting recent economic indicators showing Victoria's economy is rebounding, such as strong growth in employment and retail spending.

Victoria's labour market has bounced back faster than Deloitte first anticipated. Employment increased by 4.8 per cent in the two months to November.

The latest data from the Australian Bureau of Statistics (ABS) also shows positive signs of recovery, with more than 150,000 Victorians finding work in the last quarter of 2020. According to the data, employment increased by 74,000 in November on the back of an increase of 82,000 in October.

The forecast of a strong recovery after the pandemic restrictions follows the broad range of stimulus measures outlined in November's state budget.

"The early positive results of the hard work of all Victorians in contributing to our economic recovery are encouraging - and shows our strategy is working," says Pallas.

"It shows how important our strategy of driving case numbers down and opening up has been to getting our economy going again.

"Jobs will remain front and centre in our recovery plans as we continue to invest in employment support across Victoria, together with our record pipeline of infrastructure projects."

Melbourne workers keen to return to city workplaces

The recovery forecast coincides with a Roy Morgan survey of more than 500 workers in the City of Melbourne, which found the majority want to get back to their workplaces so long as COVID-safe plans are in place.

"Almost 60 per cent of people surveyed wanted to return for improved health and wellbeing, and 53 per cent were motivated by the improved productivity of the office environment," says City of Melbourne Lord Mayor Sally Capp.

"Our message to workers returning to the city is that we've missed you, welcome back.

"We want Melbourne businesses to thrive again because they are a vital part of what makes our city great."

The Lord Mayor says the research shows while many people have embraced greater flexibility and convenience working from home, they don't want to live at work.

"More than 90 per cent of people were willing to return to the office," she says.

"The research shows people miss the benefits of working face-to-face, including the increased collaboration and socialising, along with the atmosphere and buzz of the city."

The Lord Mayor adds business leaders have a critical role to play in bringing people safely back to the workplace, with more than half those interviewed indicating their decision to return was largely influenced by their direct manager or CEO.

"We welcome the Victorian Government's decisions to continue the staged return to workplaces and, when the time is right, the City of Melbourne is committed to having 100 per cent of our workforce return safely," she says.

"We encourage employers across the city to do the same as restrictions ease.

"We are working with the Victorian Government and the business community to ensure workers feel confident they are returning to a COVID-safe environment."

The surveys took place between Friday 27 November and Thursday 10 December 2020, with the following key findings:

  • Almost two thirds of respondents were either willing to return to their central Melbourne workplaces or had already returned by late November and December, while 44 per cent were willing to return and 15 per cent had already returned.
  • More than 90 per cent of workers willing to return to work.
  • COVID-safe procedures and adherence to measures was the most commonly cited factor leading to people feeling safe to return to work.
  • 64 per cent of respondents said the city atmosphere was a drawcard and motivated them to return, including the opportunity to go to cafes, support local businesses and enjoy the buzz of the city.

City Activation portfolio chair, Councillor Roshena Campbell, says prior to COVID-19 city workers made up almost half of the city's average daily population, so their safe return is critical to keeping city businesses viable and Melburnians in jobs.

"Melbourne faces a new challenge of trying to create economic growth after the devastating effects of the COVID-19 pandemic," says Cr Campbell.

"Having office workers begin to return today is an important step forward for city businesses that have recently endured some of the toughest trading conditions in generations.

"We're already seeing more people return to Melbourne each day, enjoying the restaurants, shops, bars and art galleries that make Melbourne the engine room of Victoria's economy."

Updated at 10:52am AEDT on 18 January 2021.

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