Domestic holidays boost economy by more than $7 billion

Overhead shot of a beach in regional Australia.

A greater number of Australians holidaying at home has kept the economy up and running, with recent data from the Treasury revealing that local spending helped GDP grow by $7.5 billion over the December quarter.

Treasurer Josh Frydenberg said the boost was enough to offset the impact of strict border closures, which have brought international tourism to a halt and deprived the economy of a main source of expenditure.

“While there are some sectors in the economy that continue to do it tough, it is important to note that Australians typically spend more overseas than foreign tourists spend in Australia,” he said.

According to ABS data, Australian tourists spent $47 billion overseas in 2019, compared to foreign tourists who spent only $23 billion on Australia’s shores.

Domestic tourists also tend to spend more time and money in regional areas, while international tourists gravitate mainly towards the nation’s capitals. The uptick in domestic travel has so far been a boon for regional spots, particularly those in east coast states.

RELATED: Aussies hit the shops in 2021, says Citi


The Treasurer maintains that the Australian economy is tracking better than expected, despite setbacks such as the country’s troubled vaccine rollout.

“While the continued vaccine rollout is an important step in protecting Australians against the threat of the virus, the timing of the rollout is not expected to derail momentum in our economic recovery,” he said.

In its latest Financial Stability Review, the Reserve Bank revealed that Australian GDP has almost returned to its pre-pandemic levels, though some parts of the economy continue to be constrained. 

Wage growth remains stubbornly low, but reduced opportunities for spending over 2020 coupled with the Government’s income support payments saw household disposable income increase by 5 per cent over the year.

Citi Australia’s latest credit card index showed consumer spending was up 23 per cent in March. While airline spending is subdued compared with early last year, it rose by 69 per cent over the month.

“Spend is now slightly higher year on year compared to 2020. This strong rebound post-COVID is a pleasant surprise that speaks to the return of consumer confidence in the Australian economy,” said Choong Yu Lum, head of credit cards at Citi Australia.


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