Australia in Recession

GDP figures released for the June quarter showed the Australian economy contracted by 7% following a 0.3% contraction in the March quarter. This means we are officially in recession for the first time since 1991.

This is the biggest quarterly contraction since records started being collated in 1959 and results in an annual growth contraction of 6.3% which, based on academic economists' estimates, is the worst annual result since 1931.

Australia was the only major economy to avoid a recession during the 2008 global financial crisis - mainly due to demand from China for its natural resources.

The result was driven by a collapse in household consumption which fell by 12.7 per cent in the quarter.

Discretionary spending dropped by 25 per cent, while spending on services fell by 17.6 per cent. The biggest hit was to transport spending, which fell by 85.9 per cent, while households slashed spending on hotels, cafes and restaurants by 56.1 per cent.

The results however compare favourable with their nations who have already reported their June quarter national accounts.

Britain's economy contracted by 20.4 per cent, America's by 31.7 per cent, Germany's by 9.7 per cent while Canada's shrank by 11.5 per cent.

The government has already pumped more than A$200bn (US$147bn) in economic stimulus. 

The Covid situation now plus the bushfires earlier in the year have created a dismal economic outlook.
We are in for a rough ride.