Australia’s slow vaccination rate jeopardizes post-Covid economic recovery – OECD issues serious warning
- Australian economy recovering strongly from pandemic recession and growing
- But the OECD warns that this could derail if vaccine roll-outs are so slow
- Country is vulnerable to massive outbreak that would hit the economy hard
The Australian economy is expected to experience strong growth in 2021 as it prolongs the recovery from the coronavirus recession.
But the Organization for Economic Co-operation and Development has warned that this recovery is at risk without widespread Covid-19 vaccinations.
In its most recent outlook, the OECD expects the Australian economy to grow by 5.1 percent this year, driven by domestic demand and supported by a strong labor market and rising house prices.
A woman receives the AstraZenca vaccine at the Royal Exhibition Building Covid-19 Vaccination Center in Melbourne
Private investment will also be boosted by government incentives and low lending rates.
The OECD expects growth of 3.4 percent in 2022, which would still be well above the long-term trend of about 2.8 percent.
It also forecasts the unemployment rate to fall further to five percent next year, from its current level of 5.5 percent.
OECD KEY ECONOMIC FORECASTS FOR AUSTRALIA
2021 – 5.1 percent
2022 – 3.4 percent
Consumer price index (inflation)
2021 – 2.0 percent
2022 – 1.7 percent
2021 – 5.5 percent
2022 – 5.0 percent
Source: OECD Economic Outlook
Nevertheless, Covid-19 restrictions continue to limit some parts of the economy and insolvencies will rise from their current low levels, the OECD said.
“Without widespread vaccination, the economy is vulnerable to a major outbreak and associated restrictions, and delays in skilled migration could hamper growth.”
The Paris-based institute also warns that a rising Australian dollar, trade tensions with China and travel restrictions will continue to weigh on exports.
It says both the Reserve Bank and the federal government should be ready to provide further support if the recovery falters, and targeted support may also be needed where international border closures have the greatest impact.
On taxes, the OECD again called on more states and territories to replace taxes and fees on real estate transactions with a recurring land tax to promote mobility and more efficient use of real estate.
It also believes that further increasing renewable energy, boosting the use of electric cars and improving climate policy coordination among governments would help Australia make progress towards the goals of the Paris Agreement.