The Australian economy contracted 0.3% in the March quarter, according to official figures that predate the economic damage caused by the COVID-19 blockages.
Gross domestic product increased only 1.4% in the 12 months to March 31, as the economy was affected by the bushfires and the onset of the coronavirus crisis, according to the Australian Bureau of Statistics.
“This is the slowest growth over the year since September 2009, when Australia was in the midst of the global financial crisis and marks only the beginning of the expected economic effects of COVID-19,” said Wednesday ABS Chief Economist Bruce Hockman.
“I think this is the kind of story we have been waiting for,” said Besa Deda, chief economist of St George.
“It looks much better than some of the other economies in the world. “
Economists said there was an outside chance that reading would be flat or positive, which would have given Australia the opportunity to extend its unprecedented period by more than 29 years without a recession, which economists define as two consecutive quarters of economic contraction.
While the Australian economy will certainly contract this quarter – the consensus is for a contraction of around 8.5% – it is clear that Australia will officially register its first recession in almost 30 years when the next GDP figures will be published in September.
Westpac economist Andrew Hanlan said the main downside surprise in the numbers was that consumer spending fell 1.1%.
“As retail has grown, spending in other areas has been hit hard by the pandemic,” said Hanlan.
While spending on goods has increased – particularly in food and pharmaceuticals – spending on services such as travel, food and entertainment has fallen sharply.
Housing construction and business investment declined, as did business inventories, as the pandemic disrupted supply chains.
Total private demand subtracted 0.8 percentage points from GDP, while public demand contributed 0.3%, as public spending increased 1.8% as the authorities reacted to the bush fires and the COVID-19 pandemic.
BIS Oxford Economics chief economist Sarah Hunter said she expected the GDP drop in the first half to be “relatively small compared to other economies – we now expect the downward peak in GDP is well below 10% ”.
“The economy has been affected by bush fires, drought, cyclones, floods and a global pandemic and has only fallen 0.3%,” said CommSec chief economist Craig James. .
This is only a decrease of 1.2% at an annualized rate, compared to a contraction of 5.0% in the United States, 7.7% in the United Kingdom, 8.6% in Germany and 33 , 8% in China, said James.
Originally posted as GDP fell 0.3% in the March quarter