Page 66 - Food&Drink magazine April 2022

TRENDS & TECHNOLOGY
Economist says industry outlook positive
Inflation, war and climate catastrophes were cited as potential brakes on a rebounding economy by Nicki Hutley at the APPMA member dinner event in Sydney in March, but overall, her message was upbeat. Lindy Hughson & Wayne Robinson report.
The resilience and agility of human beings, when combined with optimism, point to a bright future for the domestic and global economies. This is the view of economist Nicki Hutley, who started her talk by addressing the impact of Covid, noting that the Australian economy was in much better shape than most other countries.
“Australia might not have got everything right along the way, but overall, we've done remarkably well. There has been a vast fiscal injection in Australia, at all levels of government,” she said.
Hutley said that Australian households were flush with savings – “a so-called war chest of around $200 billion” – which they would now begin to spend. She warned, however, an upswing in online purchasing would lead to a corresponding upswing in cybercrime.
Commenting on the waves of volatility caused by lockdowns, and variations in sector performances, she noted that activity across regions also varied enormously.
She reeled off a host of stats that she said showed a “nation of remarkable resilience” and said that as life normalises we are likely to see less of a “patchwork economy” across states, territories and sectors.
She told the crowd that the French expression Plus ça change – ‘the more things change, the more they stay the same’ – was apt for Australia, for “while the pandemic has been a wild ride the fundamental structures and its challenges remain largely unchanged”.
Ultimately, however, as things normalise post-Covid, the fiscal stimulus will be reversed and act as a drag on activity, according to Hutley, but she said with an election looming we can be sure that the government won't be pulling the purse strings too tightly just yet.
Looking at economic risks ahead, Hutley said interest rate rises are a certainty, but unlikely until the final quarter of this year or first quarter of 2023, in her estimation.
She described the war in Ukraine as a “curve ball” in economic terms, saying that Russia is in a financial crisis with recession “all but guaranteed” thanks to sanctions. The fallout for oil and other
6 MARCH-APRIL 2022 MACHINERY MATTERS
commodity prices is of some concern, she said, but Australia will be cushioned to some degree by the rising Aussie dollar. Although inflation rises predicted in Europe could have some flow through, overall it would have only limited impact on the Australian economy, she said.
Hutley then moved to climate change, which she said was the third big risk for the economy, but said the idea that action on climate change was bad news for the economy was not a complete or accurate narrative, and cited various examples of why investing in green power was economically beneficial.
Economist Nicki Hutley: Still many reasons for cautious optimism.
“The economic message is clear:
inaction comes with inconceivable costs to lives and livelihoods – you only need to look out of the window [where rain continued to bucket down] to see this – while action leads to new and sustainable economic opportunity,” she said.
Hutley ended her presentation talking directly about packaging, saying that while it can help solve the problem of food waste, plastic was “in the spotlight”, with the recent UN resolution to forge a legally binding agreement by 175 countries to end plastic pollution in two years’ time the latest in a long line of demands on the packaging industry. She said consumers have “shown far more willingness” to change their behaviour than corporates and said that food’s origins, its processing and packaging, will be under the microscope, demanding more of the packaging supply chain, but she said early movers into green initiatives would be rewarded by consumers.
Hutley took a few questions on the outlook for local manufacturing, which she said would have to focus on innovation as labour costs were too high to compete on mass production, even if we wanted to, and on the outlook for workers as automation increased, which she said had always been positive.
“While the pandemic has been a wild ride, the fundamental structures and its challenges remain largely unchanged.” ■
“The economic message is clear: inaction comes with inconceivable costs to lives and livelihoods ... while action leads to new and sustainable economic opportunity.”