Australia enjoyed a record 28 years without a recession; the envy of the world.
That record run ended on Wednesday after the Australian Bureau of Statistics stated Australia’s Gross Domestic Product fell a record 7% in the June quarter, following a 0.3% drop in the March quarter, marking two consecutive quarters of contraction — the technical definition of a recession.
“The global (coronavirus) pandemic and associated (government) containment policies led to a 7% fall in GDP for the June quarter. This is, by a wide margin, the largest fall in quarterly GDP since records began in 1959,” said Michael Smedes, Head of National Accounts at the Australian Bureau of Statistics.
Prime Minister Scott Morrison told parliament the economic figures represented a “heartbreaking” day for the nation.
“This is a devastating day for Australia,’’ Morrison said. “Our Australian economy has been savaged by the COVID-19 global pandemic and recession. It is delivering an awful and heartbreaking blow to Australians and their families all around the country.
“Australians know why we are now in a COVID-19 recession. And they also know, as the government has known, that this day, as I said, would come. The government has acted to protect lives and livelihoods.”
Australia’s Treasurer Josh Frydenberg said the GDP figures were “heartbreaking”.
“Behind these numbers are heartbreaking stories of hardship, being filled by everyday Australians as they go about their daily lives,” Frydenberg said.
“Be it the tourism operator in Cairns. The tradie in Melbourne. The cafe worker in Adelaide. The domestic flight attendant in Sydney. They have all been hit hard by COVID-19.
“The road ahead will be long, the road ahead will be hard, and the road ahead will be bumpy.”
The economic downturn and recession is not as severe as those facing most other developed nations. The UK and US have reported equivalent falls in GDP of 20.4% and 9.5% respectively in the June quarter.
— Brett Mason (@BrettMasonNews) September 2, 2020
Saul Eslake, an economist and fellow at the University of Tasmania, told the Financial Times that continuing strong demand from China for raw materials, particularly iron ore, had helped to support the Australian economy.
A strong fiscal response from Canberra in the form of wage support and stimulus programs, and reduced imports had helped the economy perform better than many of its peers, he said.
Australian businesses, workers & families still need support as we continue to battle #COVID19.
— Josh Frydenberg (@JoshFrydenberg) September 1, 2020