The ACT economy is expected to grow by 2.4 per cent in 2021, according to new data from Deloitte Access Economics, which said forecast growth is the lowest in Australia because the ACT economy has been one of the most resilient through the pandemic.
The Australian economy is expected to grow by 4.4 per cent in 2021.
The 2.4 per cent growth is on par with the ACT’s 2019-20 growth rate. It means the ACT will continue its run of three decades of uninterrupted annual economic growth despite COVID-19
Australia’s economy contracted by -0.3 per cent in 2019-20, while NSW and Victoria recorded contractions of -0.7 and -0.5 per cent respectively.
“In many ways, the region’s clean bill of health – and its population’s willingness to keep spending – is a significant achievement given the capital’s proximity to Victoria and NSW, both of whom have struggled with clusters of cases for many months now,” the Deloitte report said.
“The Territory’s virus success has consequently enabled the ACT to continue loosening restrictions, with life in Canberra effectively back to normal – minus some international students who remain locked out of Australia.”
HomeBuilder rates as a share of households in the ACT are also the highest in the nation.
“No doubt, strong employment helps, with low unemployment and high participation helping families to spend,” the report said.
“Additionally, the ACT’s high share of public sector employees has translated to significantly fewer job and wage cuts – both critical drivers of household consumption.”
The ACT’s unemployment rate remains the lowest in the nation at 4 per cent, despite a small uptick in the last quarter.
This remains significantly lower than the national rate of 6.8 per cent.
However, this does not necessarily mean the ACT is in the clear yet.
“The economic conditions throughout this financial year have been incredibly volatile,” an ACT Government spokesperson said.
“The risk of a credit rating downgrade will remain as we continue to deal with the consequences of the greatest economic and health crisis in a century.”
The ACT managed to maintain its top tier credit rating at the end of last year despite NSW and Victoria being downgraded.
The credit rating outlook from Standard and Poor (S&P) for the ACT and the Commonwealth remains at ‘negative’ following a credit rating review in September 2020.
This means the credit rating could be lowered “within the next two years if the economic damage caused by the pandemic is more severe or prolonged than expected”, S&P said.
A more comprehensive picture of the ACT’s economic and fiscal position will be revealed in the next budget update on 9 February.