Australia is entering a recession, a first in almost thirty years

For the first time since 1991, Australia went into recession, after seeing GDP shrink by 7% in the second quarter due to the coronavirus epidemic.

The Australian economy experienced the largest decline in its history in the second quarter due to the effects of the coronavirus health crisis, which increased pressure on the government, while the emergence of new sources of pollution raised fears of further difficulties.

According to official data published on Wednesday, September 2, Australia’s gross domestic product (GDP) fell by 7% during the April-June period. On an annual basis, GDP fell by 6.3% during the second quarter, while decision-makers expected growth of 2.75%.

The effect of the Covid-19 pandemic

This is the sharpest quarterly decline ever in the Australian economy, whose extraordinary growth was not even interrupted by the global financial crisis of 2008, said the Australian Bureau of Statistics (ABS).

Michael Smedes, senior official at ABS, explained that the pandemic, and the measures taken to fight the coronavirus, were responsible for this “unsurpassed” contraction that “largely” lowers previous records.

A country goes into recession with two negative quarters and Australia’s GDP had fallen 0.3% between January and March. The figure for the second quarter is completely in line with the government’s forecasts.

“The quarter that ended in June was marked by a significant reduction in household spending on services as households changed their behavior as restrictions were decided to include the spread of the coronavirus,” says Michael Smedes.

The number of hours worked decreased by almost 10% while social benefits increased by more than 40%. Trade was also weighed down during the second quarter, which was characterized by a decrease in imports of goods from 2.4% and service exports decreased by 18.4%.

The government has released tens of billions of dollars to mitigate the economic impact of the outbreak, but the economy has been hit hard by the relative containment a few months ago.

A second wave of epidemics concentrated in Melbourne

Australia registered fewer than 100 new cases of coronavirus on Monday, for the first time in two months, giving hope for a lasting ebb of the second wave of epidemics, which has been concentrated in the Melbourne region.

The state of Victoria, of which Melbourne is the capital, registered only 73 new cases on Monday, while the peak of the crisis, at the end of July, was more than 700 new infections in 24 hours. Restrictions have been imposed on city residents for several weeks, including a curfew and the closure of all non-essential businesses until 13 September.

State Secretary Daniel Andrews announced that he would present a roadmap at the stages of deconfinement on Sunday, specifying that the easing of restrictions would take place gradually.

However, the borders between the state and the rest of the country should remain closed after the financing. Most other states do not register, or very little, new pollutants.

The neighboring state of New South Wales is currently the most affected after Victoria. Ten new cases were identified on Monday in the country where Sydney is the capital. Nearly 26,000 cases have been registered in Australia, a country where 663 people have died from the coronavirus.

With AFP and Reuters