Science and technology continue to play a critical role in supporting the rapid global response to the COVID-19 outbreak and will continue to support Australia’s economic recovery and long-term resilience.
The opportunity for synthetic biology-enabled solutions is highlighted in the recently released CSIRO Synthetic Biology Roadmap, which provides a commercially focused and strategic view on how this field of science could underpin a thriving Australian bioeconomy.
What is the current macroeconomic environment?
Global economic environment
- COVID-19 is in 225 countries/territories with 232,636,622 confirmed cases and 4,762,089 confirmed deaths (WHO, 30 September).
- Global economy: Projected to grow 6% in 2021 and 4.9% in 2022, with the 2022 forecast revised upwards by 0.5 percentage points (pts) to reflect pandemic developments and changes in policy support (IMF, 27 July).
- Recent global price pressures (e.g. in food, oil, and housing) are attributed to pandemic-related developments and transitory supply-demand mismatches, with inflation expected to return to pre-pandemic levels in most countries in 2022 (IMF, 27 July).
- The US: GDP increased 1.6% in the second quarter of 2021, after a 1.5% increase in the first quarter (FRED, 26 August).
- The EU: GDP increased 2.1% in the second quarter of 2021, compared with a 0.1% decrease in the first quarter (Eurostat, 7 September) [PDF · 1MB].
- China: GDP grew quarter-over-quarter by 1.3% in the second quarter of 2021, up from 0.4% in the first quarter (Reuters, 15 July).
- Interest rates: Eurozone remains at 0%, China at 3.85%, Japan at -0.1%, the US at 0.25%, and the UK at 0.1%.
Global assistance measures for COVID-19
- Over 6.1 billion doses of vaccine have been given worldwide, although the vaccine rollout has fallen considerably short of achieving equitable global distribution (LSHTM, 29 September).
- Policy support varies considerably across countries: Advanced economies have announced sizable fiscal support, such as the US’s proposed multi-year American Families Plan (US$2 trillion) and the American Jobs Plan (US$2.3 trillion), and the Next Generation European Union (NGEU) fund which raised €20 billion issuing its first bonds in June (IMF, 27 July).
- However, fiscal support in emerging markets and developing economies has been more limited. 2021 projections for fiscal deficit as a percentage of GDP are 2.8% lower for emerging market economies and 4.7% lower for developing economies, as compared to advanced economies’ spending (IMF, 27 July).
- Globally, there are currently 194 COVID-19 vaccines in pre-clinical development, along with 121 in clinical development (WHO, 24 September).
- For a comprehensive and recent global policy response tracker, see IMF, 2 July.
Australian economic environment and COVID-19 assistance measures
- 102,723 confirmed COVID-19 cases and 1,278 confirmed deaths (Department of Health, 30 September). Further, over 27 million COVID-19 vaccine doses have been administered in Australia so far (Department of Health, 29 September).
- State and territory governments continue to impose different restrictions, with lockdowns remaining in place in ACT, NSW and VIC.
- COVID-19 assistance measures include a federal COVID Disaster payment of up to $750 per week for eligible workers affected by state lockdowns, and various financial supports and incentives for small and large businesses across federal and state governments.
- GDP rose 0.7% in the second quarter of 2021, down from 1.9% growth in the previous quarter. (ABS, 1 September).
- The RBA expects a material GDP decline in the third quarter of 2021 due to disruptions associated with the Delta outbreak. Forward indicators such as business confidence [PDF · 364KB] have been in negative territory over July and August. There has been media speculation over whether this economic decline will continue or quickly bounce back.
- The unemployment rate fell 0.1 pts to 4.5% from July to August, which is the tenth monthly consecutive fall, down from 6.9% in October 2020, now at its lowest level since November 2008 (ABS, 16 September).
- However, the effective unemployment rate, which includes employed people who worked zero hours for economic reasons, was estimated at 6.8% in July, up from 5% in May (The Guardian, 22 August).
- The youth unemployment rate increased 0.5 pts to 10.7% from July to August (ABS, 16 September).
- Business conditions are subdued, with 27% of businesses in June reporting difficulty finding suitable staff to fill jobs, and 24% of businesses reporting decreased revenue over the previous month (ABS, 24 June).
- R&D spending levels remain unchanged, with business expenditure on R&D (BERD) as a proportion of GDP at 0.9% and gross expenditure on R&D (GERD) as a proportion of GDP at 1.8% in 2019-20 – both in the same proportions as in 2017-18 (ABS, 3 September).
- The RBA interest rate remains at a historic low of 0.1%.
How might macroeconomics impact the value of synthetic biology in Australia?
Synthetic biology is an interdisciplinary field of science that applies engineering principles and genetic technologies to rapidly design and build novel biological solutions. Synthetic biology has the potential to address industrial, health and environmental challenges and underpin Australia’s transition toward a carbon neutral and circular economy.
Expected and observed economic impacts of synthetic biology applications for Australia:
From the recently released CSIRO Synthetic Biology Roadmap:
- Synthetic biology opportunities such as sustainable protein alternatives in food and agriculture, engineered cell-based therapies and vaccines in health and medicine, and biomanufacturing solutions for more sustainable industrial processes could create a $700 billion global opportunity by 2040.
- Our growing synthetic biology research strengths, trusted regulatory environment, feedstock availability, proximity to Asia, and attractive international business environment means Australia could play a leading role in servicing the Asia-Pacific market.
- Australia is developing biofoundry capabilities at CSIRO and Macquarie University, and researchers have access to cutting edge infrastructure through NCRIS-funded programs. Recent national and state investments exceeding $80 million will further enhance research capabilities and performance.
- Under a high global growth, high market share scenario, Australia’s total economic opportunity could be $27 billion in annual revenue and 44,000 jobs by 2040.
- Australia’s food and agriculture sector is expected to be the largest market for applications of synthetic biology with up to $19.2 billion in annual revenue and 11,700 jobs by 2040.
Capturing the high market share scenario
To capture the high market share scenario defined in this analysis, the roadmap identifies the need to increase support for industrial translation and scale-up, while sustaining investment in synthetic biology R&D capabilities.
Priority actions for the next 4 years include:
- Support research translation and seed new businesses through targeted investments and bioincubator programs.
- Develop shared infrastructure to enable development and demonstration of synthetic biology applications.
- Attract international businesses and talent to build critical mass and enhance international collaboration.
- Strengthen foundational ecosystem enablers including leadership, governance, skills, and collaboration.
Australia’s future recovery and resilience
- In the short term, the focus is on slowing the spread of COVID-19 and economically protecting Australian households and businesses, while supporting vaccine deployment and related science.
- In the medium term, focus should shift to how science, technology and innovation can lead the Australian economy’s recovery. Medium-term recovery opportunities involve deployment-ready technologies that could have positive economic impacts.
- In the long term, focus should shift to building a resilient economy and reducing Australia’s exposure to future shocks. Long-term resilience involves technologies that are often still in development and demand further investment, technical and commercial testing, and scale-up before their economic potential is fully realisable.
Disclaimer: This document contains general information only, and we are not, by means of this document, rendering professional advice or services. Before making any decision or taking any action that might affect your finances or business, you should consult a qualified professional advisor.