GDP is projected to grow by 5.1% in 2021 and 3.4% in 2022, driven by domestic demand. Confidence is high and labour demand is strong. Rising incomes and a declining saving rate will support consumption. The unemployment rate will fall further. Nonetheless, restrictions continue to constrain some parts of the economy and insolvencies will rise from their current low levels. Until widespread vaccination is achieved, outbreaks may necessitate further restrictions.
The pandemic took a particularly heavy toll on young businesses and highlighted existing education inequalities. The recovery brings an opportunity to boost innovation and reallocation, necessary to face the challenges of digitalisation and meet climate change targets in a cost-efficient way. It also provides a chance to boost educational opportunities for disadvantaged students and refocus on improving the living standards of Indigenous communities.
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2021 Structural Reform Priorities
Australia’s economy and labour market have been resilient, with rising employment and labour-force participation; projections show a continued robust output growth of around 3% in the near future. Living standards are good but socio-economic challenges remain, especially for more vulnerable groups with high risk of poverty. Australia faces economic challenges that, if not handled well, could see an end to its strong track record.