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The impacts of COVID-19 containment on the Australian economy and its agricultural and mining industries

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  • Dixon, Janine M.
  • Adams, Philip D.
  • Sheard, Nicholas

Abstract

We simulate the economic impacts of the COVID-19 pandemic on the Australian economy using VURM, a detailed computable general equilibrium model for Australia. We identify five sources of economic perturbations: changes to productivity due to changing work practices, changes in household demand imposed by voluntary and mandated social distancing behaviour, changes in international trade due to a weakened world economy and severe curtailment of international travel, reduced population growth due to lower net migration and large debt-financed fiscal stimulus. Variants of these shocks and associated recovery paths are simulated in VURM, with three scenarios describing potential recovery arcs. The macroeconomic and industry impacts are reported for each scenario. Ultimately, our focus is on the impact on output and employment in the agriculture and mining sectors, and on their likely recovery prospects. At the peak of economic impacts, output in these sectors declines by about 6 per cent relative to a no-COVID baseline. Compared to the economy-wide average, the decline in agriculture and mining output is small. This can be explained by relatively minor impacts on work practices, relatively low negative impacts on demand for intensive agriculture (helped by fiscal supports for households) and relatively low disruption to export demand.

Suggested Citation

  • Dixon, Janine M. & Adams, Philip D. & Sheard, Nicholas, 2021. "The impacts of COVID-19 containment on the Australian economy and its agricultural and mining industries," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 65(04), January.
    • Handle: RePEc:ags:aareaj:342979
    DOI: 10.22004/ag.econ.342979
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    References listed on IDEAS

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    1. Calvin Z. Djiofack & Hasan Dudu & Albert G. Zeufack, 2020. "Assessing COVID-19’s economic impact in sub-Saharan Africa: Insights from a CGE model," Vox eBook Chapters, in: Simeon Djankov & Ugo Panizza (ed.), COVID-19 in Developing Economies, edition 1, volume 1, chapter 1, pages 53-68, Centre for Economic Policy Research.
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