Treasurer Josh Frydenberg concedes Australia is already in recession despite official figures confirming just one quarter of negative growth.
GDP for the March quarter contracted by 0.3 per cent in line with economists’ predictions.
The contraction is the first since 2011 ending Australia’s record run of economic growth.
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The figures take into account the economic impact of the summer of bushfires and the very early stages of the COVID-19 shutdown.
Australia will technically be in recession after two consecutive quarters of negative growth which is now inevitable.
When asked if Australia was already in recession Mr Frydenberg confirmed that it was clearly the case.
“Well, the answer to that is ‘yes’ and that is on the basis of the advice that I have from the Treasury department about where the June quarter is expected to be,” The Treasurer said.
“The June quarter, the economic impact will be severe, far more severe than what we have seen today. that’s what Treasury’s advice to me is.”
Economic figures for the June quarter will be released in September with experts predicting a contraction of between 8 and 10 per cent.
Despite the economy shrinking in the March quarter, the Treasurer has described the performance as “remarkable” given the situation the country was facing.
Shadow Treasurer Jim Chalmers says the news should come as little surprise, given the perilous state of the economy before the crises.
“While the pandemic came without warning, our longstanding weakness in the economy did not,” Mr Chalmers said.
“Even before the worst of this virus, even before the bushfires, we had issues with weak growth and stagnant wages and weak business investment and productivity, and net debt in the budget had already more than doubled.
“So we entered this very difficult crisis from a position of weakness rather than strength.”
A 1.1 per cent fall in household consumption was one of the main drivers of the economic contraction in the March quarter.
According to the ABS there was a big drop in spending on services such as air transport, hotels, cafes and restaurants, recreation and culture.
There was a rise in spending on goods such as food and pharmaceuticals ahead of the COVID-19 lockdown.