International and state economies during the December quarter 2021

Released
2/03/2022

International comparisons

The economic impact of COVID-19 continued to diverge across countries over the December quarter 2021. Most OECD economies recorded positive growth over the quarter, despite the arrival of the Omicron variant in December. For Australia, GDP rebounded strongly as several regions emerged from lockdowns. The level of economic activity is now 3.4% above December quarter 2019 pre-pandemic levels.

Data from https://data.oecd.org/gdp/quarterly-gdp.htm, 25 February 2022, in seasonally adjusted volume measures.

Australian state economies and mobility

In Australia, the December quarter was marked by the end of prolonged lockdowns across New South Wales, Victoria, and the Australian Capital Territory. The reopening followed increased vaccination rates. However, the end of the quarter saw the arrival of the Omicron variant of COVID-19, which started to spread rapidly during the second half of December.

Google mobility data tracks how visits and length of stay at various locations have changed relative to pre-pandemic mobility. Figure 2 shows the changes in mobility to retail and recreation locations as the stringency of state COVID-19 containment measures changed over the December quarter.

As lockdown restrictions on trading, gatherings and movements were lifted in NSW, Victoria, and the ACT in October, there was an increase in retail and recreation mobility. States which did not experience prolonged lockdowns saw steady rises in mobility, and Tasmania returned to above pre-pandemic levels.

Mobility data shown as weekly averages. Data from: Google LLC "Google COVID-19 Community Mobility Reports". https://www.google.com/covid19/mobility/ Accessed: 04/01/2022.

Cases of the Omicron variant of COVID-19 began to escalate at the end of December 2021, however the pattern of retail and recreation mobility was similar to December 2020. This suggests that mobility was not significantly impacted by Omicron in the December quarter 2021.

Mobility data shown as 7 day rolling average and is relative to pre-pandemic mobility. Data on daily COVID cases from: https://www.covid19data.com.au/states-and-territories, Accessed: 7/2/2021.

Household spending and mobility

Higher levels of retail and recreation mobility in states and territories coming out of lockdowns coincided with increases in household consumption. Large increases in household spending were recorded in NSW, Victoria and the ACT following limitations on consumption opportunities in the September quarter. Other states saw smaller rises, in line with increases in mobility. The Northern Territory saw a decrease in mobility this quarter due to the commencement of the wet season, and a number of short lockdowns and lockouts.

Figure 5 shows the contribution to quarterly change in household spending by consumption of goods or services. Both goods and services consumption contributed strongly to the rise in household spending for the regions emerging from lockdowns. Spending on clothing and footwear, furnishings and recreational goods grew strongly as retail stores reopened. Expenditure on services was supported by a return to in-person dining at cafes and restaurants, as well as recreation and personal care.

Household spending in non-lockdown states was led by services. Spending on goods was subdued this quarter but remains at elevated levels.

Contributions may not be additive due to rounding.

The ending of lockdowns and reaching of vaccine targets reduced restrictions on large gatherings and promoted people to attend sporting, cultural and entertainment events throughout the December quarter. This is reflected in NSW, Victoria and the ACT, recording the largest increases in recreational and cultural services consumption (figure 6). Increased gambling activity also contributed to these rises, as venues reopened.

Recreational and cultural services consumption in original volume terms.

Transit station mobility increased across most states and territories in the December quarter 2021 as restrictions on travel eased and a number of state borders reopened in the lead up to the holiday season. This recovery in transit station mobility is reflected in rises for household consumption of transport services (figure 7). The Northern Territory was the only state to record a fall in transport services consumption for the quarter, impacted by various lockdowns and lockouts in November and December.