COVID-19 will hit Aussie business but health & mining will have higher survival rates
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Healthcare and mining are among the sectors expected to have a higher survival rate out of COVID-19.
Despite Australia escaping with less than 8,000 cases, its economy has still been hit with 15 per cent of the economy shut down. Even as it re-opens, the impact is expected to last for some time.
Ruthven Institute founder and economic futurist Phil Ruthven thinks that a large number of businesses will close in the next two years. He also expressed concerns that there would be fewer start ups as a result of the pandemic.
“In 2020 and 2021, we forecast one in six businesses closing their doors, instead of the usual one in eight,” Ruthven said.
“The number of new business start-ups could also fall below 200,000 until the economy regains its composure.”
Some industries are expected to emerge with more survivors than others over the next four years.
Healthcare had the top enterprise survival rate of 74 per cent. Mining was solid too, recording 65.2 per cent, which is slightly above the average for all industries.
Industries towards the bottom of the list included accommodation & food services with 53.6 per cent and retail trade with 59.1 per cent.
Ruthven also said he thinks while business ownership had become increasingly popular in recent years, this crisis is a wakeup call that it is a challenge as much as an opportunity.
“Starting a business has become increasingly popular in the post-industrial age of service industries and advanced digital technology, and especially in the 21st century,” he said.
“This is partly because the entry cost is lower than was the case for businesses in the Industrial Age; partly because, until now, Australia enjoyed nearly three decades of recession-free economic growth; and partly because business ownership is perceived to grant an individual more freedom than being an employee.
“But 2020 is reminding us that life, work and business ownership can’t be taken lightly.
“We all must endure challenges in all of these areas; and such obstacles can be truly scary when we least expect them.”