Despite the government’s best efforts to stem the economic fallout of Covid-19, unemployment is still on the rise – but not everywhere.
According to new analysis by IBISWorld, there are five Australian sectors among more than 750 that will be more in-demand because of the coronavirus pandemic:
The cotton-growing industry is projected to grow by 128.8 per cent in 2020-21 to $961.8 million. This is partly due to the severe drought conditions over the last two years. But in the last six months, rainfall over the Murray Darling Basin has been above average, and the Bureau of Meteorology has also forecast the amount of water to rise strongly.
The debt collection industry is also expected to grow by more than 10 per cent over the current financial year to $1.6 billion, with growth in household arrears and cash flow problems set to increase demand for these services.
But individuals and businesses have been protected by temporary changes to the minimum threshold for a creditor to begin bankruptcy proceedings. The figure has risen from $2,000 to $20,000, and you now have six months to respond to proceedings, during which unsecured creditors can’t take action to recover debts.
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IBISWorld also anticipates the water freight transport sector will perform strongly this financial year, with revenue in this industry expected to increase by 9.4 per cent to around $2.1 billion. As the global economy recovers from the pandemic, international trade will resume, driven by a boom in online shopping.
The weak Australian dollar will also help Australian-made products remain relatively cheap in overseas markets. A resurgence in spending in Asia will also drive demand for Australian products.
The buy now, pay later sector has also proven to be a star performer during the pandemic, with Afterpay shares increasing by a stunning 740 per cent from the depths of the March sell-off. The sector is expected to grow 9.1 per cent to $741.5 million in revenue this financial year.
As BNPL services rise – driven by younger consumers – the use of credit cards have declined. Many retail stores have now also incorporated BNPL to their payment options. Consumers feeling the pinch will likely use BNPL to buy essential goods, according to IBISWorld analysts.
With the Covid-19 pandemic driving greater demand for technology solutions as people work from home, the data storage services sector is expected to rise by 8 per cent in revenue to $3 billion. Cloud services in particular have benefited from the global transition to remote work, as have video conferencing software. Major enterprises have also upscaled their cloud capabilities.
By contrast, some sectors are expected to bear the brunt of the Covid-19’s economic impacts.
Australia’s international airline industry is expected to take a 31.5 per cent hit in 2020-21, to $14.3 billion, with global travel not expected to go back to normal until next year or until a vaccine is widely available.
IBISWorld analysts also expect housing and construction to be significantly hampered, with the pandemic leading to a slump in new building commencements as investors put projects on hold. This sector is projected to shrink by 22.4 per cent to $39.9 billion.
In the hospitality industry, pubs, bars and nightclubs in particular have taken a severe hit, with revenue in this sector expected to decline by 12.7 per cent. Even though most states in Australia have wound back restrictions significantly, the threat of having to reimpose them remains. Even businesses unaffected by restrictions are seeing fewer patrons through the doors as people stay indoors and spend less.
The coal mining sector is projected to fall by 6.9 per cent to $67.8 billion as coal miners are highly reliant on foreign demand. Weak global activity has seen a reduced demand for coal, which is used to generate electricity and produce steel. Lower prices are set to lead to reduced revenue, with many major coal mining firms already announcing production cuts.
White collar workers have also been hit hard by the pandemic: the management consulting sector will see a projected decline of 4.5 per cent in 2020-21, as businesses scale back on non-essential expenses, including consulting fees.
Rather than lay off junior employees and mid-level managers, many large firms have opted to cut pay packets instead. Larger firms are expected to do better than smaller companies, and IBISWorld analysts predict the former may use the pandemic to acquire the latter.
Once the virus is contained, digital transformation, agility and resilience is expected to become the main focus for management consulting firms and their clients.
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