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Economic outlook and recovery

Before the pandemic, we faced a very different scenario.

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Economic growth and employment growth were particularly strong, averaging around 3.5% a year over the three years to 2018‑19.

The unemployment rate had fallen to an 11-year low of 4.6% in 2018‑19.

The Victorian economy was experiencing an extended period of strong jobs growth, with 523,000 new jobs created between November 2014 and March 2020.

Indeed, Victoria created more jobs than any other state or territory in the nation.

But like economies around the world, the global pandemic is having a serious economic impact.

Due to lower consumer and business confidence and the necessary health restrictions put in place to keep our State safe, Victoria’s GSP is forecast to contract by 4% in 2020‑21, following a small decline in 2019‑20.

Employment fell by 180,000 between the March and September quarters 2020 and is expected to fall by 3.25% in 2020-21. The unemployment rate is forecast to peak at 8.25% in the December quarter 2020, and average 7.75% in 2020-21.

Without record levels of support from government, these impacts would be far worse.

These numbers also demonstrate the significant investment and effort that will be required to drive Victoria’s – and Victorians’ – recovery.

Victorian Economic Forecasts (per cent)

As public health restrictions ease and Victoria begins its recovery, a strong rebound in economic and employment growth rates is forecast, particularly in 2021-22, aided by strong Government support and record low interest rates.

But risks to the economic outlook are greater than usual.

The Jobs Plan, as well as other initiatives announced since the 2019‑20 Budget Update, will support around 125,000 jobs over the life of these initiatives.

That’s in addition to the ongoing and future benefits of these investments.

Modelling by Deloitte Access Economics also estimates that Government’s expenditure and revenue decisions will result in a cumulative $43.9 billion increase to GSP over the budget and forward estimates period.

The 2020‑21 Budget funds capital projects with a total estimated investment of up to $19.8 billion, creating the largest capital program in our State’s history.

The 2020-21 Budget also provides funding of $29.2 billion over four years in output initiatives, building on the Government’s $11.4 billion investment in the 2019-20 Budget.

Average government infrastructure investment from 2020-21 to 2023-24 will be around four times the 10-year average to 2014-15.

But investment in services as well as infrastructure will be key. In addition to being integral in the recovery of our communities, this Budget’s investment in services and support will also help drive our rebuild, supporting thousands of new Victorian jobs.

Government infrastructure investment

Reviewed 23 November 2020

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