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Australia tumbled into its first recession for nearly three many years with its pandemic-crippled economic system shrinking a report seven p.c in the second quarter, official information exhibits.
With huge swathes of the home and world economic system shut all the way down to comprise the lethal illness, enterprise exercise suffered a catastrophic drop — regardless of authorities offering billions of {dollars} in assist — not even witnessed through the world monetary disaster.
“Today’s national accounts confirm the devastating impact on the Australian economy from COVID-19,” mentioned Treasurer Josh Frydenberg.
“Our record run of 28 consecutive years of economic growth has now officially come to an end. The cause: a once-in-a-century pandemic,” he mentioned.
The economic system contracted seven p.c in April-June from the earlier three months, in line with authorities forecasts, the Australian Bureau of Statistics mentioned. That adopted a 0.three p.c dip. A recession is outlined as two consecutive quarters of contraction.
Gross home product dropped 6.three p.c year-on-year.
“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,” mentioned ABS head of nationwide accounts Michael Smedes.
Hours labored fell nearly 10 p.c whereas money funds of social advantages rose greater than 40 p.c, each data, whereas imports and exports have been additionally down.
The nation was already reeling from a chronic drought and large bushfires that rattled the economic system earlier than the illness struck.
The authorities has stumped up tens of billions of {dollars} to battle the financial fallout from the pandemic and Frydenberg mentioned the contraction would have been far worse with out such assist, which included funds to employers to keep away from shedding workers.
“Today’s devastating numbers confirm what every Australian knows: that COVID-19 has wreaked havoc on our economy and our lives like nothing we have ever experienced before. But there is hope and there is a road out,” Frydenberg mentioned.
Australia has confirmed nearly 26,000 instances of the illness and 663 deaths, in a inhabitants of 25 million, and had efficiently contained it in many of the nation by July.
But an outbreak in Melbourne and its surrounds since then compelled a brand new lockdown of 5 million folks in the nation’s second largest metropolis, dragging on the restoration.
Borders between Australia’s states and territories additionally stay closed to most journey to keep away from additional outbreaks, hampering tourism and different key sectors.
Authorities anticipate nationwide unemployment to peak at 9.three p.c in December and the funds deficit to blow out to nearly a tenth of GDP by mid-2021.
Still, Frydenberg insisted Australia has been extra profitable than most in dealing with the disaster.
“This gives us confidence that as a nation we are better placed than most other nations, and that by containing the virus we can chart a pathway to economic recovery and we can leave the worst of the economic crisis in the June quarter behind us,” he mentioned.
“But the road ahead will be long. The road ahead will be hard. The road ahead will be bumpy.”
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