COVID-19 has had a significant impact on businesses both globally and here in Australia in just a few short weeks. The International Monetary Fund (IMF) has warned Australia could be one of the worst-hit economies in the Asian region, with the Australian economy forecast to shrink 6.7% this year. The pace of change triggered by COVID-19 is unprecedented. Some changes are undoubtedly temporary, but there exist nine forces of change that will shape Australia over the coming years.
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The future of Australia’s economy depends on how governments, business, communities and individuals respond. PwC Australia has modelled two scenarios: Fortress Australia and Enterprise Australia. These scenarios show the different directions Australia’s economic and business recovery could take after COVID-19.
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‘Fortress’ Australia, is a response to the concern that, as a nation, we lack self-sufficiency. It is characterised by nation-first decisions and higher levels of government intervention in industry. Fortress Australia sees a balanced budget de-prioritised for the sake of increased expenditure as governments build on fiscal precedence set during the crisis.
‘Enterprise’ Australia sees smarter regulation and digitisation enable private industry to grow Australia out of the crisis. Merger and acquisition activity and private investment in technology rise as industry doubles down on globalisation in search of productivity gains - in part facilitated by an open doors immigration policy. Fiscal stimulus is unwound and government targets a balanced budget.
Decision-makers across Australia’s economy face difficult trade-offs impacting economic growth, productivity, living standards, government intervention, risk appetite, digital investment, security, nationalism, international trade and more. The Fortress Australia and Enterprise Australia modelled by PwC show what outcomes for national income, industry, household consumption and employment outcomes could look like.
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PwC’s results help decision-makers across government and industry understand the key trade-offs between policy decisions and growth outcomes, and their ramifications for businesses, communities and individuals in a post-COVID-19 economy.
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