The Australian economy is predicted to reach Pre-COVID levels by late 2021.
The expected bounce-back is a result of wins on the health front and aggressive government policy.
However, despite overall positivity, Janus Henderson Investors’ Australian fixed-interest investment strategist Frank Uhlenbruch said that the new outbreaks of COVID in Sydney and Melbourne, along with Australia’s relationship with China, shows that Australia is not completely in the clear as of yet.
Mr Uhlenbruch states that “we still look for the Australian economy to rebound by around 5 per cent over 2021, though the latest outbreaks and reintroduction of state border controls have increased downside risks.”
“While a 5 per cent growth rate looks very high, we don’t expect the economy to reach the end of 2019 levels until late 2021.”
Mr Uhlenbruch also said that "the economy will have built up considerable slack and this will continue to show up in an elevated unemployment rate, low rate of wages growth and inflation rate below the RBA’s 2 -3 per cent target band,”
Mr Uhlenbruch told investors that historically low-interest rates will persist for the next couple of years propelling demand for income-producing assets.
“While a 5 per cent growth rate looks very high, we don’t expect the economy to reach the end of 2019 levels until late 2021.” Mr Uhlenbruch added that the fund manager expected the economy to reach end-2019 levels in late 2021, as the “slack” built up in terms of unemployment and wage suppression would take a number of months to recoup.