Imagine an Olympic final of the 100 metres dash and one runner has a 10 metre start on the field. Well, that’s us — the Aussie economy! And the expert commentators who are the CEOs of our top companies say we’re bound to take out the gold in the economic growth stakes, post COVID-19. However, there is one concern: Team Australia might withdraw our ‘runner’ before the finishing line!

OK, I might be a little dramatic but the analogy of us having a head start on the world’s economies is a pretty damn good one. This chart below here shows it.

I know I’ve shown this AMP Capital chart before but it is an economic ripper. It shows how our economic activity tracker index has smashed the likes of the US and Europe. And this is directly related to the success and failure of beating the Coronavirus.

I said this many months ago that most economic readings were less valuable compared to our numbers on infections and deaths linked to the virus. And it’s a really simple equation that says that if you do well on beating COVID-19, your economy will roar back.

The blue line in the chart shows we were rebounding hard until Victoria went into its second lockdown. Fortunately, we pulled out of this spiral downwards fast.

On the other hand, the USA struggled and their upward sloping red line went horizonal, while the rule-breaking Europeans paid the price in terms of infections, deaths and economic activity.

Also note how the arrival of vaccinations is starting to push the black and red lines up, but we’re doing it even better, even without a big exposure to vaccines.

This underlines the importance of the government and regulatory response to the threats of this virus. Our performance has been of a gold medal standard.

And it shows in the latest numbers and forecasts as you can see below:

• The Organisation for Economic Co-operation and Development (OECD) has upgraded our 2021 economic growth from 3.2% to 4.5%. Our long-term average growth is 2.8%.
• The NAB business confidence index rose from 12 points in January to an 11-year high of 16.4 points in February, where the long-term average is 5.1 points.
• The business conditions index, which tells us what business is saying about their situation now, lifted to a 30-month high of 15.4 points from 9.1 points, while the long-term average is 5.3.
• Job vacancies increased by 7% or 12,600 job advertisements in February. This is the 10^th successive increase taking the reading to a 9-year high of 191,994 available positions. Job ads are up 24.8% or 38,100 advertisements over the year.
• The AFR’s Business Summit assembled some of Australia’s top CEOs and they’ve given our economy a strong thumbs up.

Company CEOs from the likes of CBA, Goldman Sachs and Fortescue are all saying that the vaccine rollout plus the huge stimulus (like what we’ve seen from US President Joe Biden with his $US1.9 trillion spend) are building business confidence, which we’ll see create an economic boomtime in 2021 and 2022, at least!

But there is an elephant in the room that has to be addressed and it involves a group called Team Australia.

Keeping borders open is crucial and it’s Team Australia’s task to do it. Team Australia was a nickname borrowed to cover the combined grouping of the Federal Government and the States when we faced the challenging might of the Coronavirus.

It was a game with different game plans in many of the states but collectively it has worked and the chart above proves that. However, as in sport, sometimes the game plan needs to be tweaked. And that was the message from the CEOs at the Business Summit.

The AFR’s Phillip Coorey kicked off his story today with the matter summed up this way: “States and territories must abandon their policy of eradication and stop closing borders every time there’s a small outbreak of the coronavirus, because the vaccine rollout is lessening the health risk and the economic recovery is at stake, business and political leaders say.”

In a nutshell what that’s saying is: if we keep being too careful, we will lose that 10 metre head start in the economic competition ahead.

It’s ironic that WA’s Premier, Mark McGowan, is set to win a landslide election on Saturday and a big part of his success has been his “keep the bastards out” strategy.

The Premiers of Queensland, Tassie and South Australia played a similar game but have toned down their restrictions quicker than McGowan. And it poses the question: should the country start playing a national game plan more like the one adopted in NSW?

Business says “yes” but the voters of Australia might not understand the economic implications of being Premiers imposing excessively restrictive measures on their states.

Overkill on restrictions will lead to higher unemployment, more bankruptcies, home evictions and forced home sales and a bigger budget deficit that could force higher taxes. It would hurt the stock market and our super returns and these economic problems will add to depression and other social issues. Team Australia (the PM and his State counterparts) need to embrace a new game plan for the year ahead as the vaccine programme is rolled out. Let’s hope maturity doesn’t go west in the decisions that our leaders settle on in coming months.