It’s the first time in 29 years that the nation has entered a recession, with the last time Australia recorded two consecutive negative quarters for GDP being in March and June 1991.
While speaking to the media on Wednesday, Treasurer Josh Frydenberg was asked, “Is Australia in recession today?”
Frydenberg responded: “Well, the answer to that is yes. And that is on the basis of the advice that I have from the Treasury Department about where the June quarter is expected to be.”
It comes after it was revealed Australia’s economy shrank by 0.3 per cent over the first three months of the year, which is the first quarter of contraction since 2011.
With the definition of a recession being two consecutive quarters of negative growth, it is certain that Australia will suffer a recession as the full impact of coronavirus-related shutdowns happened during the current June quarter.
Despite conceding that Australia is in a recession, Frydenberg said the Australian economy had shown “remarkable resilience”.
“Treasury were contemplating a fall in GDP of more than 20 per cent in the June quarter. This was the economists’ version of Armageddon,” he said.
“It was in this quarter — the March quarter — that consumer and business confidence fell to its lowest level on record. That the ASX 200 lost a third of its value and, on the 16th of March, saw its biggest daily fall of 9.7 per cent on record.
“When combined with the ongoing drought, which saw farm GDP fall by 2.4 per cent in the quarter, and the devastating impact of the fires that were raging across many states, one looks back on the March quarter, and there wasn’t much good news.
“Seen in this context, the fact that the Australian economy only contracted by 0.3 per cent shows the Australian economy’s remarkable resilience.
“Indeed, Australia’s performance in the March quarter compares very well to that seen in other nations, with negative growth of 9.8 per cent in China, 5.3 per cent in France, 2.2 per cent in Germany, 2 per cent in the United Kingdom and 1.3 per cent in the United States.”
