The long-term impacts of COVID-19 on the Australian economy

Written by Ronald Pratap

on November 9, 2020

As Australia continues to weather the COVID-19 storm, it’s easy to only focus on the present. While we remain in the first phases of economic shock, it’s fair to say that the effects of COVID-19 will be widespread and felt for a long
time to come.

Workforce and industry
COVID-19 has had a heavy impact on Australia’s employment landscape. Recent figures indicate a 7.4% unemployment rate, and while job losses are hitting families hard in the short-term, these workforce shifts are also shaping how industry and employment will look in the future. Certain sectors, like aviation and tourism, might never be the same again. Increasingly, organisations are being forced to make structural changes –
operations are being moved online, and businesses are automating processes typically performed by humans. Now that these difficult changes have been made, it’s likely some of them will become permanent even after
COVID. This is particularly true in the hardest-hit sectors of hospitality and retail, where businesses will need to transform to survive, changing the landscape of these industries for the long-term.

Globalisation, trade and population growth
Short-term travel restrictions and disruption to the global supply chain have driven governments around the world to reassess their stance on globalisation. Production of some goods will be moved onshore, particularly those that are deemed of national significance like healthcare products, and there will be more slack built into supply chains to account for reduced reliability. Most significantly, Australia will feel the impact of a vast reduction in migration, with the Prime Minister estimating that 34,000 migrants will arrive in the country in the year to come – a staggering drop from the 533,500 who arrived in 2019. A lack of migrants over the longer-term will result in population decline and a reduced workforce that could have an enduring economic impact on the healthcare, tourism, housing, and agricultural sectors.

Education and skills
The pandemic will have a lasting effect on a generation of learners. International students aren’t arriving, domestic students are learning over Zoom and tertiary institutions are losing money and staff at a rapid rate. A
crisis in higher education could have long-term impacts on the structure of the sector and some institutions may not survive. But it isn’t all necessarily bad news. Rapid, innovative training courses could begin to take the place
of the traditional Bachelor’s degree, as school-leavers get the skills they need to enter a fast-evolving workforce and keep Australia competitive in key industry sectors.

Australia is going through a difficult time, but it’s important that we keep our attention focused on long-term growth and recovery. If you’d like to discuss how best to set yourself up for the future, please don’t hesitate to get
in touch by contacting our Oran Park office located in the Macarthur region.




The material shown in this article is for general information purposes only. It is not intended to be, nor should it be read as specific personal investment or risk advice.
Before acting on any of the information contained in this article you should obtain special advice from a specialist investment or risk professional, which is appropriate to your specific investment or risk needs, objectives and financial situation.
Whilst all care is taken in the preparation of this material, no warranty is given with respect to the information provided, and accordingly no responsibility for errors or omissions, including responsibility to any person by reason of negligence is accepted by RP Wealth Management.

Ronald Pratap

Principal Financial Planner at RP Wealth Management | Financial Planning l SMSF I Insurance l Property Advisory. Our purpose is to provide our clients with sound advice and direction to assist with their financial affairs and help them make the best choices in achieving what is important to them.

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