Students sit on the grass at the University of Sydney in Sydney, Australia, on Tuesday, Feb. 25, 2020. The coronavirus hit has exposed the extraordinary depth of Australia's economic dependence on China and fueled questions over whether the nation is too reliant on the Asian behemoth. In Sydney, the nation's oldest university is scrambling to cope with 15,000 Chinese visa holders locked out by the travel restrictions just as the academic year begins. Photographer: Brent Lewin/Bloomberg , Bloomberg

(Bloomberg) -- Australia’s top universities expect student enrollments and revenues to return to pre-pandemic levels by 2025, bolstering the economy’s prospects at a time when rising interest rates and inflation cloud the outlook.

The resurgence will be driven by China, India, Vietnam and Indonesia, senior executives at the nation’s biggest universities told a parliamentary hearing in Sydney Thursday. They’re boosting investment to attract students by increasing the number of offshore campuses and by providing additional scholarships.

The hearing was part of an inquiry into Australia’s top services exports — education and tourism — to gain insights into how the government can support these crucial sectors. Education exports totaled A$20.8 billion ($14 billion) in 2021/22 after plunging 45% from pre-Covid levels. The industry currently accounts for 0.9% of Australia’s GDP, down from 1.9% before the pandemic. 

A rebound in education exports is likely to add 0.4 percentage points to gross domestic product over the next couple of years, said Madeline Dunk, an economist at Australia & New Zealand Banking Group Ltd. That would be a welcome boost at a time when rapid policy tightening raises the risk of an Australian recession. 

More than 28,000 Chinese student visa holders arrived in Australia in the first three weeks of February, approximately 44% of the 63,000 visa holders outside of the country, Dunk said. She’s predicting the number to increase further in the months ahead, adding to labor supply and general domestic demand. 

“These students, they don’t just come here and live in a box,”  Dunk said. “They have to go and buy food, they spend money on services and all of that adds to the demand” in the broader economy.