Pandemic pushes economy into recession

The Australian economy contracted by 7.0 per cent in the June quarter, confirming the nation is in its first recession in almost 30 years.

Australian Bureau of Statistics head of national accounts Michael Smedes said the global pandemic and associated containment policies led to the fall.

“This is, by a wide margin, the largest fall in quarterly GDP since records began in 1959,” he said on Wednesday.


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Economists expected the national accounts for the June quarter to show an economic contraction of around six per cent.

In the year to June, the economy shrank 6.3 per cent, the ABS said.

In the March quarter, the economy had contracted by 0.3 per cent.

A technical recession is defined by two consecutive quarters of negative growth.

Earlier, Finance Minister Mathias Cormann said Australia had weathered the coronavirus crisis better than most other countries.

“In all of the circumstances, Australia is performing comparatively better than most others,” he told reporters in Canberra ahead of the data.

“We are going to have to continue to do everything we can to get ourselves back into the best possible position.”

Private demand detracted 7.9 percentage points from economic growth in the quarter, driven by a 12.1 per cent fall in household expenditure which included a 17.6 per cent drop in services expenditure.

“The June quarter saw a significant contraction in household spending on services as households altered their behaviour and restrictions were put in place to contain the spread of the coronavirus,” Mr Smedes said.

On the positive side, net exports (exports minus imports) contributed a large one percentage point to the result, while public demand added 0.6 percentage points, driven by health-related spending by state and local governments.

The economic downturn has already seen the number of people unemployed push past more than one million for the first time.

Treasury has warned a further 400,000 Australians could join the dole queue before Christmas, partly as a result of Victoria’s harsh lockdown.

© AAP 2020