Australia exits first recession in almost 30 years

SYDNEY: Australia has exited its first recession in almost 30 years, ater official figures released on Wednesday showed the economy grew 3.3 per cent in July-september compared with the previous quarter.

With local transmission of Covid-19 largely under control, official data showed businesses have begun to rebound and consumer spending has surged.

The Australian Bureau of Statistics said household spending largely drove the economic bounce, rising 7.9 percent compared with the previous quarter.

However, central bank governor Philip Lowe warned that positive economic indicators masked lingering difficulties.

“These figures... cannot hide the reality that the recovery will be uneven and bumpy and that it will be drawn out. Some parts of the economy are doing quite well, but others are in considerable difficulty,” he told lawmakers on Wednesday.

Australia’s central bank has predicted the country’s economy will not return to pre-pandemic levels until the end of 2021.

The economy has yet to fully recover from the coronavirus-fuelled recession, recording a 3.8 percent slump for the year to September.

The return to economic growth followed a record seven percent decline in the June quarter and a 0.3 percent dip in the first quarter of 2020.

A recession is defined as two successive quarters of negative economic growth.

The positive growth comes despite Victoria state -- which accounts for about 25 percent of Australia’s economic output -- spending much of the September quarter in one of the world’s strictest lockdown, curtailing economic activity there.

In a patern repeated across the globe, economic shutdowns to curb the spread of the coronavirus sent Australia tumbling into recession as whole industries ground to a halt.

Around a million people lost their jobs and many more were forced to take pay cuts or saw their hours slashed.

In response, the government and the central bank have embarked on a vast stimulus spending programme, pumping billions into the economy to avert a full-blown depression.

Last month, the Reserve Bank of Australia also cut interest rates to a record low of 0.10 percent as it atempted to help hasten the recovery.

Higher unemployment is expected to linger, with the jobless rate rising to seven percent in October.

Closed borders continue to drag on the economy, with trade detracting 1.9 percentage points from GDP in the September quarter as exports fell due to weaker demand for Australian mining commodities and travel restrictions.

Wednesday’s figures were roughly in line with economists’ expectations, coming as Australia continues to roll back virus restrictions and open domestic borders ater largely containing major outbreaks.

Meanwhile, every time Elisa drives to a client’s house for a hairdressing job, she makes sure to pack a bag of groceries in the car in case she is stopped by Greek police. Skirting the country’s strict lockdown rules to put food on the table, she is among thousands of undeclared Greek workers facing additional hardship during the second wave of the coronavirus pandemic.

“I write out a declaration that I’m going shopping, and I mainly work in my neighbourhood,” says the 32-year-old.

“The city centre is more risky as police checks are more frequent,” she told AFP.

Greece went into a second nationwide lockdown on November 7 ater a dangerous spike in infections accompanied by scores of daily fatalities.

Anybody found by police venturing outdoors without a valid reason faces a 300-euro ($359) fine.

Company workers may commute with a written declaration from their employer. But that’s not an option for the self-employed -- mainly native Greeks and long-established immigrants -- and especially those hiding their full income from tax authorities.

Greece’s black economy has historically been one of the biggest in Europe, accounting for over a quarter of the country’s output.

Now, ater a decade-long economic crisis that wiped out a quarter of the country’s wealth and sent unemployment soaring, many Greeks facing job precarity say they cannot afford to keep up with taxes and living costs.

The hairdressing salon that employed Elisa was among thousands of small businesses that did not survive the 2010-2018 crisis.

“I’m forced to break the law. It’s a mater of survival,” says Vangelis, a plumber in his 40s who takes jobs in his neighbourhood and declined to give his real name.