International airlines and housing construction are the two sectors expected to shrink fastest this financial year.

Above-average rainfall and soaring household debt mean the reverse is true for cotton growers and debt collectors.

After analysing 750 industries to determine the five most likely to fly and fall, research firm IBISWorld tipped the four sectors to become this year’s best and worst performers.

Water freight transport, buy now pay later, and data storage rounded out the top five fliers.

Hospitality, coal mining and management consultants rounded out the top five fallers.

Buy now pay later surge

The OECD expects Australian GDP to fall 5 per cent this financial year, but IBISWorld believes the Buy Now Pay Later (BNPL) and Data Storage sectors will buck that trend.

The market research firm said BNPL is projected to grow by 9.1 per cent.

This is partly because retailers like Kmart and Bunnings are promoting the payment method to lure customers who avoid credit cards, and partly because customers feel more confident about buying big-ticket items online.

Meanwhile, the data storage sector could expand by 8 per cent to become a $3 billion industry, as the shift to working from home boosts demand for cloud services and video conferencing software.

And then there are the debt collectors.

With household debt to income ratios hitting 200 per cent before the pandemic, AMP Capital chief economist Shane Oliver told The New Daily it’s unsurprising debt collection was cited as a big industry winner.

He said it’s “probable” debtors could experience double-digit growth, with mortgage and business loan defaults expected to rise once repayment moratoriums have been lifted.

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“Household debt was already high and businesses have been struggling through the coronavirus shutdown, and some of that would lead to bad debts,” Dr Oliver said.

“It stands to reason over the next year, particularly once bank payment holidays begin to fade away, that more people will run into trouble with their debts.”

Breaking the drought

Australia’s fastest-growing industry won’t be driven by new demands, though. Rather, the welcome end to a prolonged drought.

IBISWorld expects Australian cotton growers will grow 128.8 per cent this year, due to above-average rainfall over the Murray Darling Basin in the first half of the year.

Despite falling global cotton prices, massive revenue growth could see cotton growing become a $961.8 million industry this year.

And water freight transport is tipped to increase 9.4 per cent to become a $2.1 billion industry.

Air travel will nosedive

Conversely, IBISWorld said Australia’s airlines, tradies and hospitality industries should brace for a grim 12 months.

After being whacked by a 28 per cent decline in revenue over the previous financial year – accelerated by border closures and sluggish traveller numbers – international airlines are expected to shrink a further 31.5 per cent in 2020-2021.

Dr Oliver said that prediction would rely on the “virtual level of inactivity” witnessed in the June quarter continuing for the next 12 months.

“But it has a broader flow-on to the wider economy, because with less international travel comes less demand for caterers to supply planes, airline staff becoming effectively unemployed, airport shops close and demand for hotels and rental car companies diminishes,” he said.

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However, the report said the industry would fare much better if Australia brings infection numbers under control and establishes safe ‘travel bubbles’ with other countries – including New Zealand – as early as September.

Down tools

The outlook was similarly disturbing for housing construction firms.

With priced-out first-home buyers now joined by investors, international buyers and nervous families in shying away from building a new home, overall revenue may contract by 22.4 per cent to $39.9 billion.

Although government stimulus, such as the Morrison government’s $688 million HomeBuilder scheme and the First Home Loan Deposit Scheme, is anticipated to fuel some demand, new builds may plummet more than 50 per cent below their 2018 peak.

Dr Oliver said the “negatives outweigh the positives” when considering current measures, and estimates underlying demand will fall by roughly 80,000 dwellings over the coming 12 months.

Hospitality is the last sector mentioned in the report.

IBISWorld forecasts industry revenue to fall 12.7 per cent, due to new lockdowns in Victoria, customer uncertainty, and a drop in international tourist numbers.

The five industries set for the biggest growth in 2020-21

1. Cotton growing: 128.8 per cent growth to $961.8 million
2. Debt collection: 10.4 per cent growth to $1.6 billion
3. Water freight transport: 9.4 per cent growth to $2.1 billion
4. Buy Now Pay Later: 9.1 per cent growth to $741.5 million
5. Data storage: 8 per cent growth to $3 billion.

The five industries set for the biggest falls in 2020-21

1. International airlines: 31.5 per cent decline to $14.3 billion
2. House construction: 22.4 per cent decline to $39.9 billion
3. Pubs, bars and nightclubs: 12.7 per cent decline (no dollar figure provided)
4. Coal mining: 6.9 per cent decline to $67.8 billion
5. Management consulting: 4.5 per cent decline (no dollar figure provided).