Australia is now officially in recession, joining many economies in the world at this coronavirus pandemic. In September’s first week, the Australian Bureau of Statistics reported that the country’s gross domestic product dropped by 7 percent from the previous one.
Officially in Recession
Australia’s first quarter already saw a 0.3 percent decline in the economy. It makes the second quarter officially put the country in recession. The drop in GDP in the second quarter is also Australia’s most significant decline since 1959 when records began, per CNN Business.
The country's GDP contracted 7% in the second quarter compared to the prior one, the Australian Bureau of Statistics said Wednesday. https://t.co/tXTjK2MWJv
— CNN Business (@CNNBusiness) September 2, 2020
Economic Activities Interrupted
Like with the other countries that just entered a recession, Australia blamed the pandemic for the second quarter’s decline.
“Nobody should be particularly surprised that production drops sharply when large parts of the economy are shut down,” the economists at Commonwealth Bank of Australia said.
However, even before the health crisis, Australia had also faced challenges by opening the year with massive wildfires. The Australian Tourism Export Council even said the wildfires affected the country’s tourism and consumer spending, according to CNN Business.
Australia’s Reserve Bank previously said that recovery in GDP will still depend on the length of the pandemic. On September 1, prior to the report, the country’s central bank expanded a lending facility for banks, per Bloomberg.
When the country eased restrictions in an attempt to reopen the economy, Australia then imposed hard lockdowns in the populous Melbourne following another wave of confirmed coronavirus cases.
Household spending in the country, which comprises more than half of Australia’s GDP, declined by 12.1 percent. Moreover, Bloomberg also noted that contraction in the country’s economy is also largely caused by drops in services sectors. Transport and the aviation industry shrank by 85.9 percent, while hotels and restaurants reported a slide of 56.1 percent.