Australian economy sees record contraction

Australia is now dealing with an economic recession due to the impact of the coronavirus pandemic on the hospitality, tourism and service industries. According to the Australian Bureau of Statistics (ABS), the country’s GDP declined by a whopping 7 percent during the June quarter, a new record. It follows a bad March quarter in which GDP fell by 0.3 percent.

“The global pandemic and associated containment policies led to a 7.0 per cent fall in GDP for the June quarter. This is, by a wide margin, the largest fall in quarterly GDP since records began in 1959,” said Michael Smedes, Head of National Accounts at the ABS.

He added that household spending is way down as people adjust to the ongoing lockdown measures:

“The June quarter saw a significant contraction in household spending on services as households altered their behaviour and restrictions were put in place to contain the spread of the coronavirus.”

Australia was already suffering from economic woes owing to the bushfires that ravaged much of the country throughout the second half of 2019 and into the early months of 2020. In addition to destroying 46 million acres of land and killing over a billion animals, the bushfires affected more than a quarter of Australian businesses. The tourism and fishing sectors were hit particularly hard.

Then, just as the fires began to die down, news of a deadly new virus out of China broke. Within months economies around the world were brought to a grinding halt, forcing people to hunker down in their adjustable beds.

“We have done everything possible to cushion the blow for the Australian community from Covid-19,” Treasurer Josh Frydenberg said Wednesday. “Our priority has and will continue to be saving lives and ensuring that Australia’s healthcare system has the capacity to test and to trace and to treat coronavirus cases.”

Making matters worse is the economic row between Canberra and Beijing, which began when PM Morrison expressed support for an independent, international probe into how precisely the pandemic began. Beijing took exception to this and retaliated by slapping tariffs on barley imports and suspending other imports altogether.