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photo : bloomberg

Gross Domestic Products -GDP figures from the Bureau of Statistics show Australia's economy shrank 0.3 per cent in the March quarter amid bushfires and the early stages of the coronavirus pandemic. Economists widely define a recession as two consecutive quarters of GDP contraction, which are now certain to occur. The last time Australia recorded two consecutive negative quarters for GDP: March and June in 1991, dubbed by then treasurer Paul Keating as "The recession we had to have". Even before, the full effect of the coronavirus hit, Australia's economy recorded its slowest annual growth in more than a decade, according to the ABS. During a press confrence in Canberraon Wednesday (03/06/20), The Australian Treasurer, Josh Frydenberg said thatthe economy would shrink even further next quarter, meaning Australia has entered a technical recession.

“…It was in this quarter — the March quarter — that consumer and business confidence fell to its lowest level on record. That the ASX 200 lost a third of its value and, on the 16th of March, saw its biggest daily fall of 9.7 per cent on record. When combined with the ongoing drought, which saw farm GDP fall by 2.4 per cent in the quarter, and the devastating impact of the fires that were raging across many states, one looks back on the March quarter, and there wasn't much good news.Seen in this context, the fact that the Australian economy only contracted by 0.3 per cent shows the Australian economy's remarkable resilience” Frydenberg said. 

Josh Frydenberg added that Australia's performance in the March quarter was very good compared to other countries with negative growth of 9.8 per cent in China, 5.3 per cent in France, 2.2 per cent in Germany, 2 per cent in the United Kingdom and 1.3 per cent in the United States. Although the economy fell, Australia enters this crisis moment from position of economic strength.

“…Today national account show once again that in the face of a one in a hundred year global pandemic the Australian economy has been remarkbly resilient. We entered this economic crisis and health crisis from the position of economic stregth. Growth was rising and unemployement had falling to 5,1 percent in february, 1,5 million new job was created and the badge was back in balance for the first time in 11 years. The streght gives us the fiscal fire power to respond as we have done" Frydenberg explain. 

The Australian Treasury is contemplating a fall in GDP of more than 20 per cent in the June quarter. This was the economists' version of Armageddon. Partly offsetting the falls were a rise in government spending, which added 0.3 percentage points to growth, and net trade, which contributed 0.5 percentage points as imports slumped while commodity exports held up reasonably well.(NK)