Australia faces largest post-war budget deficit and first recession since 1991
◆ Australia will post its biggest budget deficit since the Second World War this year as the coronavirus crisis sparks its first recession in three decades, writes Chris Johnston.
Despite managing the pandemic better than most developed nations, the outbreak has left its trade-exposed A$2 trillion (£1.1 trillion) economy grappling with unemployment that is expected to peak at 9.25pc this year.
Treasurer Josh Frydenberg said yesterday the budget swung to a deficit of A$85.8bn in the year to June. The shortfall is projected to further widen to A$184bn in 2020-21 – the largest since the war as a percentage of GDP, mainly owing to a government stimulus of A$289bn. Real GDP was likely to have shrunk by 7pc in the June quarter as lockdown sent the economy spiralling into recession for the first time since 1991.
Data suggests activity has picked up in the current quarter as restrictions were broadly eased in late May. Australia has so far reported more than 13,300 coronavirus cases, more than half in Victoria where Melbourne has returned to lockdown, and 133 deaths.