3 . Fortress Australia
Locking international borders kept us safe and allowed us to live more normally than elsewhere around the world . This resulted in our economy bouncing back more quickly and in the March quarter , we were the first country to get back to pre-COVID-19 level of our Gross Domestic Product .
While this has been the case , it ’ s going to start to become more problematic , particularly now as the rest of the world opens up .
The biggest impact is on unemployment . While it ’ s great news that this is trending down , it ’ s moving down more quickly because we are now allowing international migration . This is having an impact on wage levels in some sectors , adding to the cost of running a business . At some point , it will impact inflation and if strong enough , could lead to a rapid rise in interest rates .
At a more localised level , the impact on the education sector is particularly negative . Education is Victoria ’ s number one export and hence economic growth for the state is currently being heavily impacted . Local economies around universities would also be seeing a dramatic decline in activity .
Zero migration also isn ’ t having the positive impact some would expect on affordability levels . House prices right now are being driven largely by high savings rates , rising wealth and low interest rates . Longer term , a declining population should theoretically lead to cheaper housing , evidence from ageing low migration countries shows that people tend to buy in bigger cities , continuing to put pressure on house prices in these areas , while there is a dramatic decline in values in less desirable locations .
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