Dec 24, 2020  | Tags: Investment, 2021

Our Insights

On the back of an unforgettable year, it's time that we review the major economic trends for Australia in 2021. 

Beyond the global pandemic, several other major events across 2020 – such as the US election – will largely define how the new year plays out financially.

And we can still expect more surprises and uncertainty.

The vaccine will boost economies, but won’t be a silver bullet

COVID-19 vaccines are starting to roll out globally, and while this will see some level of normality return, it will be a long, slow rebuild for many countries. The vaccine brings many questions including how quickly can we distribute it, who receives it first and how effective will it be? All these factors will determine how quickly we can eliminate the clusters and pandemic, and therefore our ability to recover and strengthen the economy.

The US election result will have an impact

The US sets the tone globally, even for Australia, and the markets initially responded positively to President-Elect Biden. But market performance will be influenced by how much stability he can bring. It’s expected that Biden will have a more conciliatory and compassionate approach towards foreign affairs, so Australians can begin to feel confident towards the impact he’ll have for the long-term, even if there are short-term fluctuations.

International relations set to have a big influence

It's not just the US election that impacts the global markets and Australia in particular. We also having a growingly tense relationship with China to manage.

Currently things are strained, with China growing its list of sanctions and tariffs on Australian export products. Recently the nation was hit with 200% tariffs on wine, while barley, beef and lamb, cotton, lobster, timber and coal has also been affected.

In the new year, the responsibility will largely fall on Australia to repair its relationship with China. It is hoped that with a stronger and amicable bond, along with finding solutions to become less reliant on China, will see business confidence continue to rise.

Australian property will continue to strengthen

Government stimulus has helped, but the relaxation of lending laws from March will free up finance, expand borrowing capacity and also provide a boost to the market.

Adelaide is expected to thrive, along with major regional locations with good transportation and infrastructure projects in place. Commercial property continues to be a top choice, with essential outlets, industrial spaces, storages facilities and premium properties just some of the assets catching investor attention.

Starved stocks to see a sharp rise

If travel returns on the back of a vaccine, expect airlines, accommodation and other tourism sectors to enjoy a much-needed boost as people start venturing out again.

A successful vaccine will also create a thriving pharmaceutical industry, supported by our already heightened awareness and focus on personal health and hygiene. A major flow-on impact will continue into logistics, storage and technology relating to the production, storage and distribution of the vaccine.

As normality returns and restrictions continue to loosen, hospitality and retail sectors should also experience a surge as more consumers feel comfortable to head out. 

After a major acceleration period, we may see some areas in tech, health and sectors related to remote work taper off slightly.

Cautious optimism

As the Australian Government continues to effectively manage the pandemic and bringing in stimulus to help the economy, Australians can hold some confidence in our economic outlook for 2021.

While there are plenty of positives, the reality is the battle is far from over. We still need to be weary of the unexpected and remain flexible in volatile times, without reacting to every short-term pitfall that might come up. 

Seek advice in 2021

Do you need to review your strategy for 2021 and beyond? Unsure of your next best financial move? Through any situation that comes your way next year, an expert financial adviser will set you on the right path and help you establish a diverse wealth plan.  

Talk to the team at Calder Wealth Management. Call us on (08) 8373 3333 to schedule your free initial appointment.

Written by Ben Calder at Calder Wealth Management.

This is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this document, you should assess your own circumstances or seek advice from a financial adviser and seek tax advice from a registered tax agent. Information is current at the date of issue and may change.