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Returning to normal in Australia is hopefully within reach

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SYDNEY, Australia — As the northern hemisphere dreams about reopening and restoring their pandemic-ravaged economies, an encouraging slow recovery is being played out at the other end of the world.

Australia’s success (and New Zealand’s) in suppressing COVID-19, apart from the isolated flare-up and occasional lockdown, has produced a bounce back in business and household sentiment. With vaccines now being rolled out, the prospect of a return to normal is, hopefully, within reach.

Here, Sydney, Australia’s most populated city, is slowly and cautiously emerging from the COVID virus. New figures reveal the pandemic punched a $50 billion hole in consumer spending in New South Wales, the nation’s largest state with 5 million-plus citizens. Household consumption was $23.6 billion, or 6.5% lower, last year. Households were forced to dramatically alter their financial priorities. Border closures, work-from-home orders and mandated shutdowns all upended how consumers spent.

For now we are lockdown free, and the economy is rebounding — but make no mistake, it will be a long road to the city’s economic recovery.

The virus hit Sydney’s economy hard — especially the city’s center, which relies on workers commuting in and out each day — as work-from-home orders and fears about the spread of the virus all but stopped normal activity. The surge in working from home and the closure of borders hit most services. It took people out of city offices, shops and streets, causing a major disruption to a vital ecosystem.

Last year’s restrictions dealt a massive financial blow to the city’s industry. In 2020, Sydney’s central business district (CBD)generated $140 billion. That represented 7% of Australia’s gross domestic product, or 20% of the state’s economic activity. As retail services collapsed retailers have been forced to rethink their business models. Many were forced to shut down, then reopen, then close and then reopen their doors as pandemic waves came and went. Momentum was disrupted, and recovery has been slow. But it is happening.

Sydney and the state’s reopening have resulted in home and hardware sales increasing. Sales in clothing and footwear fell dramatically at the height of the first COVID wave. But, by year’s end significant growth had occurred. 2020 was a strong year for food and beverages, as consumers were forced to stock up and stay at home.

Now people are more likely to go shopping or out for dinner in the CBD or their local suburb. However, it was a disastrous 12 months for cafes, restaurants and movie theatres. Many closed, and while people are now heading back to cafes and restaurants some have not reopened. Car dealerships are moving into positive territory. Sales have increased for both new and used cars, because the ban on overseas travel has left many households with a bonus in their domestic budget.

As Australia moves into the year’s second quarter, and colder months, and as economists marvel at the country’s extraordinary growth in consumer confidence, we are being warned that household budgets could face extra pressure over the next two years. Talk to retailers in inner Sydney and in our major suburban shopping centres and they will tell you they are nervous. And if they are nervous, so too are consumers. No one knows what is around the corner. No one knows what the city, the state or the nation’s leaders might be forced to do if the virus suddenly reappears.

Armed with our masks (wearing is not compulsory at the moment) and hand wash, we are shopping in person rather than online, we are eating out, going to the movies and sporting events and travelling beyond out city’s borders to intrastate and interstate destinations. Overseas travel is still banned, and it is unlikely to get the green light before late this year at the earliest. That, though, has been an added bonus for domestic tourism. It has been a topsy-turvey world, and recovery will be down a long and winding road.

Steve Liebmann is a journalist and a former host of the Australian “Today Show.”


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