Central Highlands COVID-19 Economic Impact Analysis & Forecast
August 2020
The COVID-19 pandemic has had wide ranging impacts on all facets of Australian life and caused a rapid transformation of the economic environment. Businesses have experienced unprecedented changes to trading conditions.
To understand these changes at a local level, Central Highlands Development Corporation (CHDC) commissioned economic and demographic specialist REMPLAN to undertake an economic impact analysis and business activity survey.
The Central Highlands economy was hardest hit in the early months of the COVID-19 pandemic when non-essential services were shut down and trading restrictions were implemented. At the lowest point, May 2020, there was an estimated 9.8% contraction in gross revenue and 1,035 reduction in employment. The region’s diversity has assisted, however, to shield the local economy and bolster recovery. The Central Highlands economy is forecast to experience a smaller annual contraction (-3.5%) compared to Queensland (-5.4%).
Gross Revenue
Recovery & Transition
Travel restrictions, social lockdown measures and economic impacts associated with managing the COVID-19 pandemic are estimated to result in a -3.5% (-$370 million) lower output for Central Highlands over the 12 months to March 2021. This is less than the Queensland forecast of -5.4% and is heavily influenced by the role of mining and agriculture in the local economy. That is, the dominant sectors in Central Highlands are those that are less impacted by the economic effects of the COVID-19 pandemic. The economic impact of COVID-19 appears to be far more significant in regions with a greater reliance on the visitor economy and population servicing industries.
Employment
Employment is forecast to have a -2.5% (-420) contraction to March 2021. This figure is lower than expected due to government initiatives such as the JobKeeper program. As at May 2020, it is estimated that 19.2% of Central Highlands’ businesses applied for JobKeeper support.
Gross Regional Product (GRP)
GRP is forecasted to decrease -4.4% (-$275 million) to $6.033 billion over the study period. This is higher than the estimated GRP in 2018 which was $5.956bn, therefore whilst the economy has undergone a contraction, current modelling indicates the economy will continue to move in the right direction in terms of economic growth experienced in recent years.
*Compared to baseline monthly output
Business Activity Survey
Central Highlands businesses were surveyed between July and August 2020 to understand the economic impact experienced as a result of the COVID-19 pandemic.
COVID Impact
20% changed mode
e.g. online, takeaway, appointment only
Comparative to Historical Events
The Global Financial Crisis (GFC), mining downturn and COVID-19 pandemic have each had a significant impact on the Central Highlands economy.
The lesser impact of the mining downturn and COVID-19 pandemic, in comparison to the GFC, is due to a number of factors, the most critical being the nature of the economic shock. There has been a structural change in many industry sectors in the Central Highlands, and economic diversification has played a role in shielding the local economy from aspects of the economic shocks.
The GFC and mining downturn primarily impacted resource related industries (such as mining, construction and professional services), whereas the COVID-19 pandemic is largely impacting arts and recreation, accommodation, real estate and food services.
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