Australian economy hit hard
Covid-19 pandemic causes first recession in nearly 30 years
Australia tumbled into its first recession for almost three decades with its pandemic-crippled economy shrinking a record 7% in the second quarter, official data shows.
With vast swathes of the domestic and global economy shut down to contain the deadly disease, business activity suffered a catastrophic drop – despite authorities providing billions of dollars in support – not even witnessed during the global financial crisis.
“Today’s national accounts confirm the devastating impact on the
Australian economy from Covid19,” said Treasurer Josh Frydenberg.
“Our record run of 28 consecutive years of economic growth has now officially come to an end. The cause: a once-in-a-century pandemic,” he said.
The economy contracted 7% in April-June from the previous three months, in line with government forecasts, the Australian Bureau of Statistics said. That followed a 0.3% dip. A recession is defined as two consecutive quarters of contraction.
Gross domestic product dropped 6.3% year-on-year.
The country was already reeling from a prolonged drought and massive bushfires that rattled the economy before the disease struck.
The government has stumped up tens of billions of dollars to fight the economic fallout from the pandemic and Frydenberg said the contraction would have been far worse without such support, which included payments to employers to avoid laying off staff.
“Today’s devastating numbers confirm what every Australian knows: that Covid-19 has wreaked havoc on our economy and our lives like nothing we have ever experienced before. But there is hope and there is a road out,” Frydenberg said.
Frydenberg insisted Australia has been more successful than most in handling the crisis.
“This gives us confidence that as a nation we are better placed than most other nations, and that by containing the virus we can chart a pathway to economic recovery and we can leave the worst of the economic crisis in the June quarter behind us,” he said.