Australia’s economy has plunged into its first recession in nearly 30 years as it suffers from the economic fallout from the coronavirus.
Gross domestic product (GDP) fell 7% in the April-June quarter compared to the previous three months.
This is the largest drop since the record began in 1959 and after a 0.3% drop in the first quarter.
An economy is considered to be in recession if it experiences two consecutive quarters of negative growth.
Australia was the only major economy to avoid a recession during the 2008 global financial crisis – mainly because of China’s demand for its natural resources.
Earlier this year, the economy was hit by declining economic growth due to an extreme bushfire season and the early stages of the coronavirus outbreak.
More recently, business closures across the country have taken their toll, despite measures taken by the government and the central bank to support the economy.
This is the worst economic growth in 61 years due to a sharp contraction in household spending on goods and services.
2020 will be remembered as a year to remember and a year that everyone is already trying to forget! It was the year that Australia technically lost its famous nickname “lucky country” and fell into recession for the first time in nearly three decades.
GDP figures from the Australian Bureau of Statistics showed the economy had contracted by 7% in the past three months due to the coronavirus pandemic.
For young people who have recently entered the workforce, this is something they have never experienced before. Australia has experienced steady economic growth for decades with strong exports of coal, iron ore, and natural gas to booming China. Tourism has also been an important engine of growth.
But this year the country has been hit hard. Twice. When bushfires ravaged more than 12 million hectares, tourism was criticized and thousands of small businesses lost months of essential seasonal income. Then the coronavirus became a global pandemic. Australia has closed its borders and imposed strict social distancing rules.
As a result, nearly a million people have lost their jobs. I remember watching the long lines outside social and financial support offices in March with people dazed to find themselves in this situation perhaps for the first time in their lives.
Relations with China, Australia’s largest trading partner, are also increasingly strained. Australia firmly and publicly supported a global investigation into the origins of the coronavirus in April that infuriated the Chinese government. Since then, Canberra and Beijing have traded political blows and the Australian economy has felt the pinch.
Scott Morrison’s government has already injected more than A $ 200 billion (£ 110 billion; US $ 147 billion) in economic stimulus. Australia has done better than many other countries across the world in controlling the virus and the ensuing economic recession, but this country of plenty will face a much harsher reality for a few years.
Australia last fell into recession in the mid-1990s and then at the end of 1991.
But the coronavirus pandemic has been a blow to the Australian economy, although the figure is slightly better than the 8% drop by the Australian reserve bank previously forecast.
Despite the sharp decline in economic activity, Australia is doing better than most other advanced economies which have experienced more severe downturns.
The US economy, the world’s largest, shrank 9.5% between April and June, while that of the UK fell 20.4%, pushing it into recession as well.
The French economy shrank by 13.8% and that of Japan by 7.6%.