The treasurer, Josh Frydenberg, confirmed that Australia is in it’s first recession in 29 years. The news came during his address to a press gallery in Canberra on Wednesday.
The data released on Wednesday confirmed the economy shrank by 0.3% in the March quarter.
A technical recession hasn’t been declared but growth is expected to worsen in June.
“The June quarter, the economic impact will be severe, far more severe then we have seen today,” Frydenberg told reporters.
The Government predicts June would have a -0.5% decline and has promised another $220 million stimulus spending. The Reserve Bank has promised to cut interests rates by a quarter of a percent.
Prior to the outbreak of COVID-19, GDP grew 1.4% on March before the bushfires hit the economy according to Australian Bureau of Statistics.
“This was the slowest through-the-year growth since September 2009, in the midst of the global financial crisis,” said Bruce Hockman, the ABS chief economist. “It captures the beginning of expected economic effects of COVID-19.”
Despite the grim outlook, Frydenberg states that he’s positive that Australia would have a stronger recovery.
“Australia’s performance in the March quarter compares very well to other nations, with negative growth of 9.8 percent in China, 5.3 percent in France, 2.2 per cent in Germany, 2 per cent in the United Kingdom, and 1.3 per cent in the United States,” he said in an interview.
The size of hit was cushioned by the increased government spending. The Treasurer will hand an economic update this July, ahead of the budget this October 6th.
The Reserve Bank stated the depth of economic slump could be less than expected. However, Governor Phillip Lowe stated a highly uncertain outlook and called for the Federal Government for support.
Subscribe to FIB’s Weekly Alchemy Report for your weekly dose of music, fashion and pop culture news!
