Economic Report 2020/21 Australia from Switzerlands Perspective

Executive Summary

After one and a half years of pandemic, Australia continues with its international borders tightly shut and smaller local outbreaks continuing to trigger immediate lockdowns and temporary inter-state border closures. Nevertheless, the Australian economy managed to re-bounce in the much desired ‘V-shape`, marking an end of recession with GDP (AUD 1’925.8 billion [CHF 1’246.6 billion]1 in 20202) and unemployment rates (5.6% in March 20213) recovering to prepandemic levels. The Australian dollar, the fifth most traded currency, remained relatively stable with a quick downturn during the onset of the pandemic.

The recovery was led by unprecedented fiscal policy spending of AUD 311 billion (CHF 201 billion) since the onset of the pandemic and renewed record-spending announced for the 2021-22 budget driving national net debt up to an estimated AUD 981 billion (CHF 635 billion) in 2025, which according to the government is expected to be 41% of GDP (currently at approx. 30%).4 The expansive fiscal policy is untypical for the liberal-national coalition in power, but already very low interest rates leave no alternatives for monetary policy.

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