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Australia’s reduced Immigration impacts economic growth

Since the Sydney Olympics in 2000, emigration to Australia increased rapidly as the country became recognised as one of the fastest-growing populations of any developed nation.

However, as with most countries during 2020, the coronavirus pandemic placed a significant halt on immigration as Australia closed their borders, disrupting previous projections regarding Australia’s population growth for the coming years.

Financial consultancy firm, Deloitte, has forecast that Australia’s population will grow by at least 600,000 fewer people than previously predicted for 2022 as a result of COVID-19 restrictions. They also projected that Australia’s net migration arrivals would decline by 20,000 during the 2020-21 financial year and only rise by 20,000 in the following year.

Emigrating to Australia

Changes in Australia’s immigration policy

In addition to COVID-19, immigration in Australia has also been significantly affected following several changes to Australia’s immigration policy.

November 2019 saw Australia introduce two new sets of visas including a skilled Work Regional visa and a Skilled Employer-Sponsored Regional visa, with 25,000 places reserved for these visa types.

Regional visas aim to direct immigrants away from Australia’s big cities and for skilled workers to be more evenly distributed across the country.

Australia’s immigration cap will remain at 160,000 places, down from a limit of 190,000 back in 2018.

In 2021, the limit for General Skilled Migration will decrease by around 30,000 places, and the skilled independent visa will drop from 16,652 to 6,500 spots.

The State Nominated Skilled visa will reduce to 11,200 places, down from 24,968, the Skilled Work Regional visa will reduce to 11,200 from 23,372 in 2019.

Australia’s Budget announcement indicated that skilled visas would be steered towards fulfilling 17 priority occupations, 11 of which are within the health care sector.

Greater focus will also be placed on families as it’s revealed that partner visas will increase to 72,300. Additionally, it was announced in early December that partners who apply for visas offshore would no longer need to be out of the country when the visa is granted.

australia passport

How will a reduced immigration impact Australia’s economy?

Loss of immigration is likely to have significant financial implications for Australia, with it being doubtful that the country will reach the 3% economic growth forecast pre-pandemic without the support of steady immigration.

Deloitte highlighted that a reduced population impacts the pace of economic recovery including housing construction, utilities, with falling birth-rates likely to affect the outlook for school numbers.

Statistics show that Australia’s current population consists of approximately five million baby boomers, with fears that declining immigration will affect the number of young migrants entering the country. As a result, it’s feared that there will not be a strong enough young labour workforce to support Australia as the older generation enters retirement.

The reduced numbers of international students have severely impacted higher education as it’s predicted that 2021 will see 300,000 fewer students from abroad as a result of travel restrictions.

Research has found that the Australian cities most impacted by reduced numbers of international students include Sydney with 72,000 fewer students from abroad, followed by Melbourne with 64,000 less students.

Australia is said to introduce trials next year in a bid to encourage the return of international students. That being said, Australia has experienced fewer coronavirus infections than most developed countries, which could make it an attractive place to study going forward.

June 2020 also saw Australia’s gross domestic product (GDP) contract by a record 7%, which can be partly attributed to reduced immigration and lack of exports as a result of closed borders.

Australia’s economic outlook for 2021

Following the many issues which are arising as a result of reduced immigration in Australia, economists predict that GDP will decline by 2.7% in the first quarter of 2021 but expected to rebound sharply during the following financial year. With the easing of COVID-19 restrictions, it’s thought that hospitality, tourism and retail will underpin Australia’s economic growth.

Australia’s unemployment rate is expected to reach averages of 7.7%, whilst it’s thought that the rate could fall to 6.72% in the following financial year.

With a COVID-19 vaccine expected to be rolled out in Australia in March 2021, it’s hoped that this could place the country on the road to economic recovery. Australia is hoping to learn from UK infection statistics as the vaccine began its UK rollout in December 2020.

Dr Kirsty Short, a virologist at the University of Queensland, stated that by March 2021, Australia would be able to observe, from looking at UK data, whether the vaccine helps to infection as well as the disease.

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