Economy

Australia In Recession For 1st Time In Nearly 30 Years

Australia In Recession For 1st Time In Nearly 30 Years”

Australia has officially entered its first recession after almost 30 years, with the June quarter GDP numbers showing the economy went backwards by 7 per cent, the worst fall on record, official figures revealed on Wednesday.

The 7 per cent quarterly GDP slump was also more than three times worse than the previous biggest fall of 2 per cent in June 1974.

"Today's national accounts confirm the devastating impact on the Australian economy from COVID-19", Treasurer Josh Frydenberg said.

Combined with a smaller 0.3% drop in the March quarter, the definition of a technical recession - two consecutive quarters of contraction - has been fulfilled.

Looking forward, Chief Economist at BIS Oxford Economics Sarah Hunter told Xinhua that Australia's economy would continue to feel the weight of Victoria's virus outbreak in the figures for the current quarter and likely wouldn't return to pre-pandemic levels until 2022.

The latest national accounts showed the economy shrank 7 percent in the June, the biggest contraction since records began in 1959.

The widely expected result is in line with earlier government predictions that gross domestic product would contract seven percent in April-June. Hours worked fell nearly 10 percent while cash payments of social benefits rose more than 40 percent, both records for the country.

More news: Class sent home from Dublin school after Covid-19 case

The country was already reeling from a prolonged drought and massive bushfires that rattled the economy before the disease struck.

Wood explained that "propping up" Australia's economy were high levels of government spending, backed by low levels of debt leading into the pandemic.

As of Wednesday, Australia had succeeded in suppressing COVID-19 throughout most of the country, excluding the state of Victoria where strict lockdowns had seen daily case rates plunge to less than 100 since peaking at over 700 in early August.

"Net Trade contributed 1.0 percentage points to GDP".

But an outbreak in Melbourne and its surrounds since then forced a new lockdown of five million people in the country's second largest city, dragging on the recovery. "Imports of services fell 50.5 per cent and exports of services fell 18.4 per cent, due to restrictions on travel and tourism", the statistics showed.

Still, Frydenberg insisted Australia has been more successful than most in handling the crisis.

"The road ahead will be long, the road ahead will be hard, the road ahead will be bumpy".



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