Consulting firm Deloitte has labelled vaccines as the best possible stimulus for Australia’s economy, confirming the nation’s recovery is delayed, not derailed.

In its latest quarterly business outlook paper, Deloitte highlighted what it calls a “two-track global recovery” as jab rates rise and advanced economies continue to move towards pre-pandemic levels.

However, it warned a full comeback was not on the horizon yet.

“Vaccinations are slowly beating mutations in the rich world.  But the poor world remains mostly unvaccinated.  That’s a problem for everyone, as it means more mutations could be coming,” Deloitte summarised.

“And it leaves the poor world doubly exposed:  as the likes of the US recover, they’ll start to unwind their policies of super cheap credit, yet those policies have helped the poor world stay afloat.  So we see a two-track global recovery, with advanced economies continuing to recover and repair through 2022, but the developing world stuck in the doldrums until 2023.  And although that global backdrop is pretty good, China is amid a sharp slowdown, so the net impact of global economic developments on the Australian economy is turning down once more.”

It said most Australians have been locked down, confidence has been hit and iron ore prices have plummeted., however it highlighted that the Australian economy isn’t broken – it is merely locked down.

“… So far only the NT, NSW and Victoria have done much to move the dial via mandating vaccines in key sectors.  Elsewhere there’s been only modest use of public health orders, and the feds have delivered little support for businesses looking at their own vaccine mandates.  Yet, even with only timid support from our leaders, the recovery through 2022 should still be excellent.”

Deloitte said the good news is rapid vaccinations have reduced the damage, and the job recovery should be great.

It also highlighted  mining to be the second best performing sector in 2021-22 for output growth.

Future of international travel

Deloitte said international borders appear set to re-open very gradually, with some form of quarantine to remain for most incoming travellers for some time.

“That keeps international travel very weak in 2022, and it may not return to pre-pandemic levels until 2024 or even 2025,” it said.

The Australian Chamber of Commerce and Industry (ACCI) today said with vaccination rates rapidly rising around the country and domestic reopening plans starting to take effect, focus must shift towards clarifying plans for the resumption of international travel.

“Although the Prime Minister’s announcement last week that vaccinated Australians will be able to travel overseas from November is a positive first step, the operation of international travel and quarantine remains unclear,” ACCI chief executive Andrew McKellar said.

“Severe labour and skills shortages, as well as the loss of export income from international education, trade and tourism, risks jeopardising the recovery of businesses that have already been smashed by lockdowns and restrictions.

“This impending crisis must be urgently addressed with a holistic plan for the resumption of international travel.  Governments must facilitate the return of vaccinated Australians, and additionally, commit to a process for increasing the number of skilled migrants, international students and tourists, working holidaymakers and business travellers.

“Australia is a great place to work, to study and to travel.  It is vital that we’re open for business.”

ACCI is seeking urgent action from the Commonwealth, state and territory governments on five priority issues:

• Increasing quarantine-free two-way travel for the fully vaccinated with other countries, detailing which countries will be included alongside New Zealand and the conditions of travel.
• State and territory governments committing to the national plan of returning the quarantine caps to their previous level when their own jurisdiction reaches 70 per cent fully vaccinated.
• State and territory governments committing to extending home quarantine to all returning Australians who are fully vaccinated, while retaining hotel quarantine until there is sufficient capacity in purpose-built quarantine, allowing increased arrivals of skilled migrants, international students, and business travellers.
• Continuing targeted support to sectors that are not going to recover until 2022 due to ongoing international travel restrictions, including travel and international tour operators and business events.
• Improving the understanding of any restrictions imposed on the movement of international travellers across borders, including clarity on airline restrictions and the lifting of limits on ships coming to Australia such as those that will operate domestic cruises.