Australia’s economy has plunged into its first recession in nearly 30 years as it faces an economic downturn from the corona virus.
Gross domestic product (GDP) contracted by 7% in the April-June quarter compared to the previous three months.
This is the biggest drop since records began in 1959, falling 0.3% in the first quarter.
An economy is considered a recession if it sees two consecutive quarters of negative growth.
Australia was the only major economy to avoid a recession during the 2008 global financial crisis – mainly due to China’s demand for natural resources.
Earlier this year, the economy was hit by a slowdown in economic growth due to an intense bushfire season and the early stages of the corona virus outbreak.
Most recently businesses across the country were shut down, despite measures by the government and the central bank to support the economy.
This is the worst economic growth in 61 years due to a sharp contraction in household spending on goods and services.
2020 will be a year to remember, a year that everyone is already trying to forget! Australia has technically lost its famous nickname ‘The Lucky Country’ and plunged into recession for the first time in almost three decades.
According to the Australian Bureau of Statistics, GDP figures show that the economy has shrunk by 7% in the past three months as a result of the corona virus outbreak.
For young people who have recently joined the workforce, this is something they have never experienced before. Australia has had sustainable economic growth for decades with strong coal, iron ore and natural gas exports to China. Tourism has also been a major impetus for growth.
But, this year, the country was hit hard. Twice. When Bush caught fire in an area of more than 12 million hectares, tourism was destroyed and thousands of small businesses lost months of essential seasonal revenue. Later the corona virus became a global epidemic. Australia closed its borders and imposed strict social exclusion rules.
As a result, nearly 1 million people lost their jobs. I remember seeing long queues outside the social and financial aid offices in March, and this may be the first time in their lives that people have been stunned to find themselves in this situation.
Australia also has an increasingly tense relationship with China, its largest trading partner. In April, Australia strongly and publicly backed a global inquiry into the origin of the corona virus, which angered the Chinese government. Since then, Canberra and Beijing have exchanged political jabs, and the Australian economy has felt pinched.
Scott Morrison’s government has already pumped more than A $ 200bn (b110bn; US $ 147bn) in economic stimulus. Australia has outperformed many countries around the world in controlling the virus and the subsequent economic downturn, but this country in general will have to face a much tougher reality in the coming years.
Australia last fell into recession in the mid-1990s, in late 1991.
But the corona virus infection is a major blow to the Australian economy, although the figure is slightly better than the Reserve Bank of Australia’s 8% drop.
Despite the sharp decline in economic activity, Australia is performing better than other advanced economies that have experienced major downturns.
The world’s largest US economy contracted by 9.5% between April and June, while the UK’s 20.4% contraction pushed it into recession.
France’s economy fell 13.8% and Japan 7.6%.