Australia is well and truly in a recession, thanks to the economic downturn caused by the coronavirus pandemic.
If you will allow me to dramatically oversimplify: that’s not great.
Figures released by the Australian Bureau of Statistics (ABS) on Wednesday morning revealed the nation’s gross domestic product (GDP) cratered by 7% in the June quarter, the largest dip in a single quarter since records began in 1959.
Here’s how that looks, in graph form:
The figures reflect the economic impact of lockdowns and other measures designed to slow the virus’ spread, and show that Australians really did put their lives on hold to combat the bastard virus.
The ABS reports household consumption expenditure tanked by 12.1%, as Australians stayed away from shops and restaurants, to say nothing of downturns in the tourism industry.
It wasn’t just spending that took a hit though, obviously. Hours worked across the board collapsed by 9.8%, reflecting how lockdowns impacted businesses across the map. The overall financial compensation of employees dropped 2.5%.
That would have sunk even further if it weren’t for the JobKeeper package, which pumped an estimated $31 billion into the economy through the June quarter.
It could have been worse, too. God only knows how cooked the economy would be if Australia just let the virus rip through society, like so many commentators and former prime ministers wish were the case.
The fact we had two consecutive quarters of negative GDP growth means we’re technically in a recession.
The last time this happened was in 1991, but the situation is vastly different this time around. Back then, the GDP ‘only’ shrank 1.3% and 0.1% in successive quarters.
Speaking in Canberra after the figures dropped, Treasurer Josh Frydenberg said 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.”
Frydenberg said the Treasury expects the September quarter’s GDP figures “will either be slightly negative or flat,” with Australia still a fair way aways from climbing out of this particular hole.
But he still expressed some optimism about the situation, saying Australia’s economy is in a stronger position than that of many OECD nations.
If you’re looking for more details on what this recession actually means, cop this earlier piece we cobbled together.