Australia enters first recession in 29 years

Australia has entered its first recession for 29 years after the economy went backward by 0.3% in the March quarter, with bush fires and the coronavirus ending the nation’s extraordinary, uninterrupted run of economic growth. Report informs citing The Guardian.

The treasurer, Josh Frydenberg, told reporters a recession was inevitable after the Australian Bureau of Statistics released national accounts showing gross domestic product fell 0.3% in the quarter. The economy grew only 1.4% over the past 12 months, which is the weakest performance since the global financial crisis. While Frydenberg said the contraction in Australia was less severe than many other countries battling the economic shock associated with the coronavirus pandemic, he warned people to brace for “difficult days ahead” because the June quarter results would be worse than the impact felt in March.

Despite being the first treasurer in nearly three decades to preside over a recession, Frydenberg insisted Australia had avoided “an economist’s version of Armageddon” during the pandemic because the lockdowns had successfully flattened the curve of Covid-19 infections, and the public health restrictions had been accompanied by significant income support. Frydenberg said the government would provide its comprehensive economic update in late July when it unveiled the review of the wage subsidy job keeper – delaying its planned mini-budget by a month. The treasurer also hinted the government might either reduce the wage subsidy from a flat payment of $1,500 or provide differential rates depending on a worker’s income.