Monday, 15th July, 2024
Monday, 15th July, 2024

Australia exits first recession in almost 30 years

Australia has exited its first recession
in almost 30 years, after official figures released Wednesday showed the
economy grew 3.3 percent in July-September compared with the previous
quarter.

With local transmission of Covid-19 largely under control, official data
showed businesses have begun to rebound and consumer spending has surged.

The Australian Bureau of Statistics said household spending largely drove
the economic bounce, rising 7.9 percent compared with the previous quarter.

However, central bank governor Philip Lowe warned that positive economic
indicators masked lingering difficulties.

“These figures… cannot hide the reality that the recovery will be uneven
and bumpy and that it will be drawn out. Some parts of the economy are doing
quite well, but others are in considerable difficulty,” he told lawmakers on
Wednesday.

Australia’s central bank has predicted the country’s economy will not
return to pre-pandemic levels until the end of 2021.

The economy has yet to fully recover from the coronavirus-fuelled
recession, recording a 3.8 percent slump for the year to September.

The return to economic growth followed a record seven percent decline in
the June quarter and a 0.3 percent dip in the first quarter of 2020.

A recession is defined as two successive quarters of negative economic
growth.

The positive growth comes despite Victoria state — which accounts for
about 25 percent of Australia’s economic output — spending much of the
September quarter in one of the world’s strictest lockdown, curtailing
economic activity there.

In a pattern repeated across the globe, economic shutdowns to curb the
spread of the coronavirus sent Australia tumbling into recession as whole
industries ground to a halt.

Around a million people lost their jobs and many more were forced to take
pay cuts or saw their hours slashed.

In response, the government and the central bank have embarked on a vast
stimulus spending programme, pumping billions into the economy to avert a
full-blown depression.

Last month, the Reserve Bank of Australia also cut interest rates to a
record low of 0.10 percent as it attempted to help hasten the recovery.

Higher unemployment is expected to linger, with the jobless rate rising to
seven percent in October.

Closed borders continue to drag on the economy, with trade detracting 1.9
percentage points from GDP in the September quarter as exports fell due to
weaker demand for Australian mining commodities and travel restrictions.

Wednesday’s figures were roughly in line with economists’ expectations,
coming as Australia continues to roll back virus restrictions and open
domestic borders after largely containing major outbreaks.

The country has been relatively successful in its pandemic health response
to date, recording just under 28,000 cases and 980 deaths.

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