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Australia enters first recession in almost 30 years
The Australian economy is in its first technical recession in almost three decades, with figures released by the Treasury confirming two consecutive quarters of shrinking gross domestic product.
Australia enters first recession in almost 30 years
The Australian economy is in its first technical recession in almost three decades, with figures released by the Treasury confirming two consecutive quarters of shrinking gross domestic product.
Figures from the June quarter have revealed a 7 per cent reduction in gross domestic product in June, following a 0.3 per cent decline in March.
The figure is on the top end of contraction for predicted figures, being the largest fall on record.
For the year, GDP contracted by 6.3 per cent.
Private demand detracted 7.9 percentage points from GDP, driven by a 12.1 per cent fall in household final consumption expenditure.
Spending on services fell 17.6 per cent, with falls in transport services, operation of vehicles and hotels, cafes and restaurants.
“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,” Michael Smedes, head of national accounts at the ABS, said.
Australia’s treasurer Josh Frydenberg spoke of devastating numbers that Australians are now facing due to the COVID-19 pandemic.
“Our record run of 28 years of economic growth has officially come to an end, the cause a once in a lifetime pandemic,” Mr Frydenberg said.
“Behind these numbers are heartbreaking stories of hardship for every day Australians as they go about their lives.”
Looking forward Mr Frydenberg pointed to Victoria’s second lock down hurting growth in the third quarter but was optimistic about Australia’s recovery.
Mr Frydenberg noted consumer confidence has recovered about 70 per cent of the way prior to the pandemic starting, while also highlighting business confidence has also improved since halts to work began.
‘But there is hope and a road out,” Mr Frydenberg said.
“The road ahead will be long. The road ahead will be hard. The road ahead will be bumpy.”
“There is hope, and there is a road out. Our plan for the recovery has seen hundreds of thousands of Australians get back to work. And thousands of Australians open their doors."
Our commitment to the Australian people is that we have your back. We were with you on the way into this crisis, we are with you through this crisis, and we will be with you all the way out of this crisis,” Mr Frydenberg explained.
The stage four restrictions that are expected to come off mid September are expected to reduce GDP by $10-12 billion people, with 400,000 losing their jobs, the treasurer explained.
To combat this, the treasurer pointed to the JobMaker plan, with shovel ready projects, reducing red tape and changing the tax system the keys to kick start the economy.
Mr Frydenberg also pointed to the Australian economy being relatively resilient compared with the rest of the world with the UK falling 20.4 per cent and the United States 31.7 per cent in the June quarter.
The announcement follows the Morrison government already extending the JobKeeper and JobSeeker subsidies until March next year due to the prolonged downturn caused by the pandemic.
Legislation now splits JobKeeper into two tiers with the flat $1,500 a month payment ending later this month.
After that, people who worked less than 20 hours a week before the pandemic will be eligible for $750 a fortnight and those who were working more than that will receive $1,200.
The maximum payment will come down to $1,000 from December until March.
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