Business & Economy

Australia enters first recession in nearly 30 years due to COVID-19

Sydney, Sep 2 (efe-epa).- Australia Wednesday recorded a 7 percent contraction in gross domestic product (GDP) in the June quarter, the worst decline in its history, and entered its first recession in nearly three decades.

“The global pandemic and associated containment policies led to a 7.0 per cent fall in GDP for the June quarter. This is, by a wide margin, the largest fall in quarterly GDP since records began in 1959,” the head of National Accounts for the Australian Bureau of Statistics, Michael Smedes, said in a statement.

In the first quarter of the year, Australian GDP, which had recorded almost 30 consecutive years of growth even during the international financial crisis, fell by 0.3 percent, leaving the country with two negative quarters in a row and is technically considered a recession.

The last time Australia went into recession was in 1991, when the economy contracted by 1.3 percent and 0.1 percent in two consecutive quarters.

The Australian Bureau of Statistics (ABS) explained in its statement that the Government’s response to support Australian households and businesses resulted in unprecedented payments from the public to the private sector.

After the pandemic outbreak, the Australian Government imposed a series of restrictions and ordered the closure of businesses to halt the spread of the COVID-19 while implementing aid packages, including wage and unemployment subsidies, as well as providing economic stimulus that in total are equivalent to 13.3 percent of its GDP.

The statement also said that private demand detracted by 7.9 percent, including a 12.1 percent decline in domestic consumption, while spending on services, such as transportation, restaurants and hotels, plummeted to 17.6 percent.

“The June quarter saw a significant contraction in household spending on services as households altered their behaviour and restrictions were put in place to contain the spread of the coronavirus,” the statement read.

The big downturn in the Australian economy was mitigated by net trade, which increased by 1 percent, and the decline in imports by 2.4 percent.

With around 25,900 accumulated cases and 663 deaths since the beginning of the pandemic, Australia continues to struggle with a strong outbreak of COVID-19, which broke out in Melbourne in June and ruined plans to recover the economy in the country after having overcome the new coronavirus. EFE-EPA


Related Articles

Back to top button