China’s management of COVID-19 will be one of the main influences on Australia’s economy this year, Treasurer Jim Chalmers says.
Beijing last month announced it was scrapping strict “zero-COVID” measures in favour of a new policy of living with the virus.
However, a wave of infections has since erupted across China after borders had been kept all but shut for three years amid a strict regime of lockdowns and relentless testing.
Experts in China are predicting three winter waves of COVID transmission with the current event expected to run until mid-January, followed by two waves in late January and late February to early March, Australia’s Chief Medical Officer Paul Kelly has said.
“The Chinese situation is something that we’re monitoring really closely because with a wave of this size, and everything that it means for the Chinese workforce … that obviously brings a substantial amount of risk to those supply chains,” Dr Chalmers told Sydney radio 2GB on Tuesday.
“And that has implications and consequences for us here.”
Dr Chalmers said while the government was trying to make Australia’s supply chains more resilient, it couldn’t just flick a switch.
Aside from China, the treasurer said he was also watching the war in Ukraine and how that will influence what happens in the US, UK and Europe this year, which in turn will influence what happens with global interest rates.
In Australia, the government remains alert to the fact that many low interest rate fixed-term mortgages will end this year and roll over to higher variable interest rate mortgages.
“That will put a lot of pressure on people,” Dr Chalmers said.
Meanwhile, overseas migration is on track to return to pre-pandemic levels in 2022/23, helping to plug some gaps in Australia’s stretched workforce.
During the pandemic, migration levels hit record lows due to travel restrictions and lockdowns.
But government modelling shows numbers rebounding to about 235,000 people per year on average, with the rapid return of international students underpinning the migration recovery.
An extra 122,000 international students arrived in Australia between December 2021 and October 2022, according to an extract from an upcoming population report.
But the report identified some uncertainties facing migration patterns in coming years, including possible restrictions on students and the rise of online learning.
Dr Chalmers said migration was part of the solution to Australia’s labour shortages, which was one of the reasons the government lifted the permanent migration cap to 195,000.
The government also wants to bolster workforce participation and train workers for the jobs of the future.
“Australia’s migration settings need to be sustainable, serve Australia’s national interest, and not be a substitute for training and building the capacity of our domestic workforce,” Dr Chalmers said.
Source: AAP
