Australia has become the latest country to officially enter recession – its first in almost 30 years – as the coronavirus crisis continues to wreak havoc around the globe.
The latest Australian Bureau of Statistics figures, released on Wednesday, showed that the nation’s gross domestic product (GDP) fell 7 percent over the June quarter. It was “the largest fall in quarterly GDP since records began in 1959,” said the Head of National Accounts at the agency, Michael Smede.
The 7-percent contraction follows a 0.3 percent drop in the previous quarter that ended in March. This means that the country’s economy has gone backwards for two consecutive quarters, meeting the parameters of a technical recession.
The private sector, much of which was shut down or at least fell under restrictions due to efforts to contain the spread of the virus, was one of the main drivers of the downturn. Private demand wiped out 7.9 percentage points from GDP, driven by a massive 12.1 percent plunge in household expenditure. Spending on services fell 17.6 percent due to coronavirus restrictions.
Treasurer Josh Frydenberg said the results were consistent with Treasury forecasts, adding that the government had done “everything possible to cushion the blow for the Australian economy” from the coronavirus outbreak.
“Today’s devastating numbers confirmed what every Australian knows: That Covid-19 has wreaked havoc on our economy and our lives like nothing we have ever experienced before” Frydenberg said, adding that there is a “road out” from the recession.
However, Shadow Treasurer Jim Chalmers argues that the lack of a proper jobs plan may hamper the recovery from “the deepest recession of our lifetimes.” According to the latest data, more than one million Australians are now out of work, and the number may increase by another 400,000 by Christmas, Chalmers said.
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