Australia, which has always pursued a globalized economic and trade policy and relies heavily on its largest trading partner, China, has struggled to post its best economic growth figures in half a century in the face of both the New Guinea virus Epidemic and the trade offensive from China over the past year. The latest news from the foreign media on how Australia’s “inward” economic model has turned in the face of adversity, leading to a rapid economic rebound.
During the epidemic, Australia took strict measures to close its borders, followed by a diplomatic dispute with China, which accounts for more than 30% of exports, barley, wine, coal and other key commodities are facing varying degrees of trade sanctions, so that the Australian economy fell into recession last year for the first Time in decades.
But the Australian government announced earlier that the country’s fourth quarter GDP increased by 3.1% quarter-on-quarter last year, the third quarter GDP growth rate was revised upward to 3.4%, is the first time since 1959, Australia has an official quarterly GDP record, the growth rate of even two quarters more than 3% of the record. The RBA predicts that the country’s GDP will return to pre-epidemic levels by the middle of the year at the end of 2019, six to 12 months faster than originally expected.
Foreign media pointed out that Australia’s rapid economic recovery is attributed to the epidemic prevention achievements of the proud European and American countries. Australia reported about 114 confirmed cases per 100,000 people, compared to more than 8,500 cases per 100,000 people in the United States, which saved Australia from the economic damage of a prolonged blockade. In addition, the Australian government quickly launched a massive subsidy program to stimulate the economy, with state-paid wage subsidies and cash grants to households and businesses totaling 10.6 percent of GDP.
More importantly, Australian businesses responded to the difficult external environment by adopting an “inward shift” model, feeding off the wave of significant growth in domestic household spending. In fact, before the epidemic, Australia had long adopted an open-door economic strategy, exporting many agricultural products and minerals and attracting a large number of foreign immigrants, students and tourists, making Australia’s economic growth a myth for 28 consecutive years and creating a demographic structure in which half of its citizens were born abroad or were the sons of immigrants. However, under the epidemic and the impact of the trade war between Australia and China, both the brewing industry and other export-oriented industries have taken action to expand their domestic sales business.
Some economists pointed out that the Australian government issued a ban on international travel, disguised as Australia’s entire population to save 4.5 billion Australian dollars, as disposable income or savings, which is sufficient to offset the loss of foreign tourist spending due to the epidemic (estimated at about 2.5 billion Australian dollars).
Thanks to the closed borders, the RBA estimates that population growth for the current fiscal year will only be 0.2%, a record low since the First World War. As Australia’s economy has shown resilience in the midst of the epidemic that has surprised the world, another debate has arisen at Home about whether Australia’s long-standing liberal immigration policy path should be adjusted.
Thousands of International Students have been denied entry due to the epidemic, a major reason for the decline in Australia’s population growth rate. Education is Australia’s fourth largest export industry, and many overseas students (mostly from Asia) choose to stay in Australia after graduation, but years of reports of rising house prices, traffic jams and new immigrants taking jobs away from nationals have fueled public discontent with Australia’s current immigration policy. The epidemic is therefore an opportunity for Australia to reduce immigration to a level that is still ahead of the world, but more restrained.
In addition, the Australian government has become more prudent in the area of investment, with a new law passed last year giving the Treasury the power to block foreign deals, as was the case when Treasurer Josh Frydenberg blocked China’s Mengniu Group (02319) from buying an Australian dairy company last August.
When the Australian government’s stimulus policies end, will Australian spending be maintained? Will Australia’s travel industry return to its former glory when the border is reopened? If China and Australia renew their friendship, will Australia still turn away Chinese investment? These questions are still full of variables, and we will see if the Australian government can create a new direction for the future development after the epidemic.