Australian officials say the nation has officially fallen into a recession for the first time since the early 1990s. Lockdowns and other restrictions imposed to contain the spread of COVID-19 have affected most parts of the economy, and hundreds of thousands of jobs have been lost.
Australia’s treasurer calls it a crisis like no other – the country’s worst downturn in decades.
Data from the Australian Bureau of Statistics has shown that Gross Domestic Product, or GDP, has fallen by seven percent in the second quarter this year. It was worse than many economists had predicted.
The coronavirus pandemic has adversely affected almost every sector; from retail and hospitality, to mining, education and tourism. The result is Australia’s first official recession in almost 30 years.
Officials say there could be more pain to come. A second wave of infections in the state of Victoria, where strict lockdown measures have been re-imposed, is likely to delay a recovery.
Mathias Cormann is the Australian finance minister.
“If you look at what was happening towards the end of June and early July, we were certainly heading in the right direction. Jobs were being restored across the economy, and indeed, across many sectors of the economy, activity was picking up. But then, of course, the outbreak in Victoria that happened. So, what we desperately need is to continue to get on top of the outbreak in Victoria and to open up the economy as much as we can as soon as we can,” Cormann said.
Australia survived the Asian financial crisis in the late 1990s and the global credit crunch a decade later. A long mining boom, sound financial management and good fortune all helped. But the Australian economy was faltering before the coronavirus took hold, partly because of drought and bushfires.
Opposition lawmakers say it is a “dark day” in Australia’s history.
Unemployment is rising. The official jobless rate is seven-point-five percent. The government has extended a multi-billion dollar wage subsidy until March 2021.
Two consecutive contractions in GDP is the official indicator of a technical recession.