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Australia in its first recession in 29 years as March quarter GDP falls

By Quanjiao Wang (People's Daily Online)    17:28, June 03, 2020

Sydney, June 3 (People’s Daily Online) -- GDP figures released by the Australian Bureau of Statistics (ABS) on Wednesday show the Australian economy fell a seasonally adjusted 0.3 per cent in the March quarter 2020.

This makes it certain that Australia will suffer its first recession in 29 years, as the full impact of coronavirus-related shutdowns occurred during the current June quarter, according to Australian Broadcasting Corporation.

The last time Australia recorded two consecutive negative quarters for GDP was March and June 1991.

The Australian economy was impacted by a number of significant events this quarter, starting with bushfires and other natural disasters, followed by the outbreak of COVID-19 and the subsequent imposition of restrictions. The government responded with the introduction of economic stimulus and support packages.

Public demand contributed 0.3 percentage points to GDP, driven by a 1.8 per cent rise in government final consumption expenditure.

Private demand detracted 0.8 percentage points from GDP, driven primarily by a 1.1 per cent fall in household final consumption expenditure. Spending on services fell significantly, particularly where restrictions impacted most severely, such as air transport services, hotels, cafes and restaurants, recreation and culture. Spending on goods rose, most notably in food and pharmaceuticals, as households prepared for the introduction of restrictions.

Treasurer Josh Frydenberg said, "Treasury were contemplating a fall in GDP of more than 20 per cent in the June quarter. This was the economists' version of Armageddon."

"Seen in this context, the fact that the Australian economy only contracted by 0.3 per cent shows the Australian economy's remarkable resilience”, he added.

Chief Economist for the ABS, Bruce Hockman, said: “This was the slowest through-the-year growth since September 2009 when Australia was in the midst of the Global Financial Crisis and captures just the beginning of the expected economic effects of COVID-19.” 

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