The farm sector and economic recovery

The farm sector has been one of the hidden stars of the economic recovery from the 2020 COVID recession. Interestingly, perhaps it is due to a general breaking of the drought across much of the country. Of course, it hasn't broken everywhere, but generally better rain conditions throughout the bulk of Australia has seen farm output increase by a massive twenty percent over the last twelve months. That's made a really important contribution to bottom-line GDP growth - and it's made a contribution to some of the recovery in employment. Commodity prices for a lot of agricultural products have been very strong - and that has helped with exports and farm income.

When I look forward I can see there that the farm sector is expecting to increase its capital expenditure over the course of the next year. That means buying machinery, equipment, and gearing up for better economic conditions. That creates a self-sustaining upturn in agricultural outlook. We currently have reasonable weather conditions across the bulk of Australia, and it looks like agriculture is going to make another solid contribution to our economy over the remainder of 2021 and into 2022. It's a good news story. The farm sector's doing well. We should be grateful for that.

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Stephen Koukoulas is one of Australia’s leading economic visionaries, past Chief Economist of Citibank and Senior Economic Advisor to the Prime Minister.

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