Farewell 2021: The Year That Was

December 2021

Phil Ruthven AM

After another year of lockdowns, border closures, quarantines, masks, vaccinations and economic uncertainty, most people will be glad to see the back of 2021 – another extraordinary year.


While Australia has certainly fared better than many nations in terms of case numbers and fatalities due to Covid-19, there has been significant damage to our economic wellbeing due to record government deficit spending, lost wealth creation, the impact on businesses’ profits and the closure of tens of thousands of businesses.

An excessive focus on case numbers rather than deaths, which have been statistically negligible in Australia, has failed to achieve a balance between health needs and the contribution businesses make to the population’s overall wealth and wellbeing, with the greatest negative impact falling on our small to medium enterprises (SMEs).


When it comes to trade and economic performance, some nations did better than others – as we see in the first chart below.

Asia at large was a clear winner, headed by China and India in a year when global growth appears to have averaged just under 6%. Australia bounced back with estimated growth of around 4.3% but was well down the ladder as seen on the exhibit.

Domestically, it’s been a year of friction between State and Federal Governments over border closures and COVID-19 suppression vs elimination strategies, and while those in power have been at loggerheads over conflicting approaches, in some states, such as Victoria, there’s been mounting unity among the community in opposition to Government initiatives, such as the pandemic bill, which met with protests and compromises before being ratified.

One of the key challenges for businesses during 2021 has been State Governments regularly changing their roadmaps around lockdowns, borders and restrictions – making it extremely difficult for companies to operate, let alone forecast and budget for the future. As our vaccination rates peak and domestic and international borders finally re-open, businesses will welcome the opportunity to plan ahead with greater confidence and certainty, so long as knee-jerk reactions over the latest Omicron variant don’t sway those in power from staying the course. After all, there’s nothing more destabilising for business investment than a lack of certainty, or constant changes in direction.

Looking beyond our borders, ongoing trade conflict between Australia and China has continued throughout 2021, with our wine, coal, barley and seafood industries the most severely affected. Fortunately, a number of the industries impacted by China’s trade restrictions are managing to redirect export to other destinations, which means that while specific sectors have been hard hit, the overall impact on the economy has been more modest than might have been expected. Thinking ahead, the message to these and other industries is clear – to diversify risk and not put all their eggs into one basket, or in this case…in one country.


According to the latest Roy Morgan data, 56.1% of Australian businesses expect ‘good times’ for the economy over the next 12 months, with business confidence higher than consumer confidence as the year draws to a close.

No doubt businesses in the accommodation and hospitality sectors, which have been hammered during the pandemic, are looking forward to a busy summer holiday season and an opportunity to recoup a tiny proportion of the losses incurred over the past couple of years, while overseas travel operators will continue to do it tough until Australians are more willing to commit to international holidays without fear of quarantine.

Industries which have come through 2021 with more positive report cards include online retailers, wholesalers, home gym and entertainment providers – from televisions and speakers to gaming consoles and more – as well as video communications, warehouse storage, transport and postal delivery services, which have ridden the e-commerce wave over the past year or more as a growing proportion of Australians have swapped bricks-and-mortar shopping for online retail, even after stores re-opened post-lockdown. However, global supply chain challenges and rising shipping container prices are driving up costs and leading to significant delivery delays, putting a dampener on the Christmas shopping season for some shoppers…and frustrated retailers.

As seen in the graph below, companies such as JB Hi-Fi are enjoying strong returns on the back of the pandemic prompting us to spend more on our homes – and spend more time in our homes.

Interestingly, popular video communications platform Zoom was a standout performer early in the pandemic in 2020, as noted below, however increased competition in the sector as working from home has become entrenched has challenged its dominance in this growing market. Zoom’s share price reached a high of $478 in November 2020, which had settled to $219 by November 2021, nevertheless still well above its March 2020 pre-pandemic figure of $146.

Businesses in the building supplies and renovation sector have had a strong year as locked-in Australians have swapped their holiday slush funds for home improvement projects, although supply delays for products such as timber, have caused headaches for those who have planned projects but are struggling to obtain materials to see them through to the finish line.

Bathroom supply company Reece is a prime example, having seen a doubling in its share price over the past 12 months.

On the property front, the residential sector has come through 2021 with flying colours compared to its commercial counterparts, which are struggling on the back of the ongoing popularity of working from home, while industrial property – particularly warehousing and distribution facilities – is performing strongly on the back of the surge in online retailing.


While actual unemployment probably exceeded 12% in the middle of 2020 – a level not experienced since 1935 – welfare (Job Keeper) limited the official unemployment number and reduced what could have been a much greater amount of pain and potential trauma.

During 2021, official unemployment peaked at 6.4% in January before slowly dropping to a low of 4.5% in August, before a spike to 5.2% in October (based on data before lockdowns eased in New South Wales and Victoria), and a return to full employment at the end of the calendar year.

It’s likely the current tight labour market – characterised by significant staff shortages in industries such as hospitality – will continue for at least the short-term with overseas workers yet to re-enter the fray due to border restrictions which, while eased, remain in place in many states, especially for residents of specific countries.


Although we probably said the same thing at the end of 2020, looking ahead to 2022, the outlook seems positive. The economy is bouncing back, employment will be on the rise and international borders should continue coming down.

Let’s hope 2021 will join 2020 and previous major economic blips in our history, such as the GFC, recessions and major wars as periods of time where there have been lessons to learn and opportunities to pivot, adapt, grow and become more resilient.

I will talk more about 2022 in our January Insight and outline the threats to this hopeful future.





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