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Australia Q2 GDP shrinks at record pace; Covid pushes nation into recession

Fresh outbreaks threaten to upend an already bumpy road to recovery and pile pressure on the government to keep fiscal taps open

Topics
Australia | Coronavirus | Gross Domestic Product (GDP)

Reuters  |  SYDNEY 

gdp, economy, growth

SYDNEY (Reuters) - suffered its worst economic downturn on record last quarter as it battled the crisis, while fresh outbreaks threaten to upend an already bumpy road to recovery and pile pressure on the government to keep fiscal taps open.

Data from the Australian Bureau of Statistics on Wednesday showed the country's A$2 trillion ($1.47 trillion) shrank 7% in the three months to end-June from a 0.3% decline in the March quarter.

This is the largest fall in quarterly since records began in 1959. GDP declined by 6.3% from a year ago.

The contraction, which was deeper than median forecasts of 5.9%, comes as Australia's second most-populous state of Victoria remains in a lockdown to curb the spread of the while borders are shut too.

More than a million people have lost their jobs since March when shut down entire sectors of the economy, hitting private sector demand and investments.

The government did step up, splashing record amounts of cash to support jobs and incomes, though Wednesday's gloomy data underlines the need for more stimulus as the recovery is expected to be uneven and bumpy.

"Looking ahead, it is clear that the path back from the COVID-19 recession will be protracted," said Sarah Hunter, chief economist for BIS Oxford Economics.

"Growth in the September quarter will be weighed down by the lockdown in Victoria, and beyond this continued health concerns, ongoing restrictions and the dialling back of income support will all weigh on the economy," Hunter added.

"We expect it to take until early 2022 for activity to return to pre-pandemic levels."

On its part, the Reserve Bank of (RBA) slashed interest rates to a record 0.25% in an emergency meeting in March and on Tuesday expanded its cheap funding facility for the country's lenders to keep low-cost credit flowing in the

It has promised to provide additional support if needed.

 

($1 = 1.3615 Australian dollars)

 

(Reporting by Swati Pandey; Editing by Tom Hogue and Sam Holmes)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Wed, September 02 2020. 08:28 IST
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