Gross value added (GVA) fell 1.0% through the year to December quarter 2020. Natural disasters, drought and the COVID-19 pandemic impacted growth in GVA across various industries.
Insights into Australian industries
Agriculture industry begins to recover from drought
Agriculture GVA rose 22.5% through the year to December quarter 2020, the largest rise since 2008. Grain output rose 84.4%, as a result of drought breaking rain at the beginning of 2020. This was reflected in a 64.6% increase in exports of cereal grains. Livestock slaughters fell as farmers rebuilt herds, resulting in a 20.0% decline in meat exports.
Strong grain output led to increased demand from supporting services such as road transport, wholesale trade and warehousing.
Agriculture GVA fell 8.0% through the year to December quarter 2019. Grain output fell for its third consecutive year over 2019 due to prolonged drought conditions on the east coast of Australia. Limited availability of animal feed led to an increase in livestock output as farmers decreased herd sizes by slaughtering stock. This increased supply of Australian meat coincided with strong global demand amidst the African swine flu, reflected in a 14.7% rise in meat exports.
Mining records weakest annual result since 2003
Mining GVA fell 3.6% through the year to December quarter 2020, well below the pre-pandemic ten-year average (6.0%). This fall was driven by Coal Mining and Oil and Gas Extraction which was partly offset by a rise in Iron Ore Mining.
Coal Mining GVA fell 12.4% as adverse weather events caused the temporary closure of mines and disrupted coal production. Global Industrial shutdowns in response to the COVID-19 pandemic led to an overall decline in demand for coal. Changes to international import policies also reduced demand for Australian coal.
Iron Ore Mining rose 2.1% as miners increased supply to meet global demand as China re-commenced steel production in the second half of 2020. Global supply chain disruption, due to the temporary closure of Brazilian mines as a result of COVID-19 infections also strengthened demand for Australian iron ore. This led to a 37.1% rise in iron ore prices through the year.
Hospitality industries record unprecedented falls
In 2020, bushfires across Australia coupled with COVID-19 containment measures (including border closures, travel restrictions and limits on capacity at venues) resulted in GVA falls across hospitality industries. Large through the year falls in industry GVA were recorded in the Transport, Postal and Warehousing (-16.8%), Administrative and Support Services (-14.0%), Accommodation and Food (-13.2%) and Arts and Recreation (-8.2%), in stark contrast to the positive average growth recorded in the ten years before the pandemic.
These outcomes were reflected in through the year falls in household consumption of hotels, cafes and restaurants (-29.8%) and transport services (-78.1%). For further insights into household consumption see the spotlight article Insights into household consumption.
Demand for health services weak amidst global pandemic
Health Care and Social Assistance GVA rose 2.4% through the year, well below the pre-pandemic ten-year average (4.9%). The onset of the COVID-19 pandemic and related containment measures led to declines in the number of face-to-face visits to practitioners and elective surgeries in the first half of 2020.
Education and Training GVA through the year growth (0.8%) was also below the pre-pandemic ten-year average (1.9%) as some international students were either unable to return to Australia or commence new studies due to government-imposed travel restrictions.
Public Administration and Safety rose 5.5% through the year, recording growth above the pre-pandemic ten-year average. This was driven by increased demand for frontline services as part of the whole-of government response to the COVID-19 pandemic. Security services and defence personnel were involved in quarantine management, contact tracing and other logistics during the pandemic.