Invest
Lockdown hit to economy not as bad as predicted
Lockdowns in Australia’s biggest cities did not have quite the expected impact on the country’s economy.
Lockdown hit to economy not as bad as predicted
Lockdowns in Australia’s biggest cities did not have quite the expected impact on the country’s economy.
Australian Gross Domestic Product (GDP) dropped 1.9 per cent in the September quarter amid a pandemic-induced economic halt in Sydney and Melbourne, figures released by the Australian Bureau of Statistics (ABS) revealed on Wednesday.
Negative growth of 2.5 per cent was predicted by economists for the quarter.
Despite being the second largest economic hit on record, behind last year's 6.8 per cent drop in the June quarter, the economy actually added 3.9 per cent year on year, above the expected 3 per cent increase.
Commenting on the data, acting head of national accounts at the ABS, Sean Crick said: "Domestic demand drove the fall, with prolonged lockdowns across NSW, Victoria and the ACT resulting in a substantial decline in household spending.”
“GDP in the September quarter 2021 was 0.2 per cent below the December quarter 2019 pre-pandemic level."
According to ABS figures, private demand detracted 2.4 percentage points from GDP, with a 4.8 per cent fall in household final consumption expenditure. Household spending on services expectedly fell 5.8 per cent, with falls in hotels, cafes and restaurants, recreation and culture and transport services.
"Household spending in NSW, Victoria and the ACT fell 8.4 per cent, compared to the other states which rose 0.7 per cent," Mr Crick said.
Public demand contributed 0.7 percentage points to GDP growth, with increases in health-related spending in response to the spread of the COVID-19 Delta variant. Public investment fell slightly but remained at elevated levels as public infrastructure projects continued.
The household saving to income ratio, however, rocketed from 11.8 per cent to 19.8 per cent, driven by increased household income and a decline in spending. Household gross disposable income rose 4.6 per cent, the fastest rise since December quarter 2008.
"The household saving ratio was below the previous peak of 23.6 per cent in June quarter 2020, when national lockdowns drove a larger decline in household spending compared with this quarter," Mr Crick said.
Commenting on the latest GDP figures, Treasurer Josh Frydenberg said that while "today’s national accounts are a clear reminder of the heavy economic costs of lockdown, there is good news for our economy in that the lockdowns are behind us".
“There will be challenges ahead, but with vaccination rates here in Australia having reason to be among the highest in the world, we can and we must live with the virus and its variants," said Mr Frydenberg.
“Omicron is not the first, and is unlikely to be the last variant that we face. But we must hold our nerve and cool heads must prevail.”
RELATED ARTICLES
About the author
About the author
Economy
Australian and Korean leaders meet to unlock billions in new trade opportunities
In a significant effort to bolster economic ties and explore new avenues for investment, Australian and Korean leaders, alongside business executives and government officials, are gathering in Seoul ...Read more
Economy
Australia’s growth beat is real — but it’s the wrong kind for capacity
Australia’s economy outpaced forecasts in the June quarter as households opened wallets and government spending did the heavy lifting, even as public investment sagged. The signal for boardrooms: ...Read more
Economy
Australia’s growth is back—but it’s the wrong kind of strong
GDP surprised on the upside in the June quarter, powered by households and government outlays even as public investment slumped. The Reserve Bank stayed hawkish, signalling that sticky services ...Read more
Economy
Australia's Economic Resilience: Strong GDP growth challenges RBA's policy stance
In a surprising turn of events, Australia's economy has shown greater resilience than anticipated, with the latest Q2 GDP report revealing a stronger performance largely driven by vigorous household ...Read more
Economy
Economist calls for July RBA rate cut following inflation data
An economist from State Street Global Advisors has called for the Reserve Bank of Australia to cut interest rates in July following today's Consumer Price Index data for June. Read more
Economy
GDP data prompts economist to predict faster RBA rate cuts
Australia's latest GDP growth data has come in significantly below expectations, prompting an economist to suggest the Reserve Bank may need to ease monetary policy more aggressively. Read more
Economy
Global markets face turbulent start amid tariff concerns, but outlook remains cautious
Global equity and bond markets have experienced a turbulent start to 2025, primarily due to concerns that a potential tariff-driven trade war could heighten inflation and recession risks. Read more
Economy
RBA may cut rates faster if GDP data disappoints, economists say
The Reserve Bank of Australia may cut interest rates more quickly if next week's GDP data disappoints, economists said following today's consumer price index data for May. Read more
Economy
Australian and Korean leaders meet to unlock billions in new trade opportunities
In a significant effort to bolster economic ties and explore new avenues for investment, Australian and Korean leaders, alongside business executives and government officials, are gathering in Seoul ...Read more
Economy
Australia’s growth beat is real — but it’s the wrong kind for capacity
Australia’s economy outpaced forecasts in the June quarter as households opened wallets and government spending did the heavy lifting, even as public investment sagged. The signal for boardrooms: ...Read more
Economy
Australia’s growth is back—but it’s the wrong kind of strong
GDP surprised on the upside in the June quarter, powered by households and government outlays even as public investment slumped. The Reserve Bank stayed hawkish, signalling that sticky services ...Read more
Economy
Australia's Economic Resilience: Strong GDP growth challenges RBA's policy stance
In a surprising turn of events, Australia's economy has shown greater resilience than anticipated, with the latest Q2 GDP report revealing a stronger performance largely driven by vigorous household ...Read more
Economy
Economist calls for July RBA rate cut following inflation data
An economist from State Street Global Advisors has called for the Reserve Bank of Australia to cut interest rates in July following today's Consumer Price Index data for June. Read more
Economy
GDP data prompts economist to predict faster RBA rate cuts
Australia's latest GDP growth data has come in significantly below expectations, prompting an economist to suggest the Reserve Bank may need to ease monetary policy more aggressively. Read more
Economy
Global markets face turbulent start amid tariff concerns, but outlook remains cautious
Global equity and bond markets have experienced a turbulent start to 2025, primarily due to concerns that a potential tariff-driven trade war could heighten inflation and recession risks. Read more
Economy
RBA may cut rates faster if GDP data disappoints, economists say
The Reserve Bank of Australia may cut interest rates more quickly if next week's GDP data disappoints, economists said following today's consumer price index data for May. Read more
