Australia emerges from COVID-19 recession with 3.3 pct GDP growth

Australia’s coronavirus recession technically “may be over” after the nation’s economy grew in the September quarter.

Data released by the Australian Bureau of Statistics (ABS) on Wednesday showed that Australia’s gross domestic product (GDP) grew by 3.3 percent in the September quarter – better than the 2.5 percent forecast by economists – as COVID-19 restrictions eased across much of the country.

It came after a 7-percent contraction in the three months to June – the largest economic fall on record.

Treasurer Josh Frydenberg said on Wednesday that the National Accounts confirmed that the economic recovery was underway.

“The Australian economy is coming back,” he told reporters. “Today’s increase in the September quarter of 3.3 percent is the largest quarterly increase since 1976.”

“Technically, Australia’s recession may be over but Australia’s economic recovery is not.”

Despite the rebound Australia’s GDP declined by 3.8 percent in the 12 months to September.

According to the ABS, a 7.9-percent increase in household spending drove the economy after a record 12.5-percent decline in the June quarter.

Spending on hotels, cafes, restaurants, recreation and culture increased in most states and territories except Victoria, the hardest-hit state by the COVID-19 pandemic in the country, which spent most of the quarter in a strict lockdown while fighting a second wave of COVID-19 infections.

“Following the record 7.0-percent decline in the June quarter, Australia experienced a partial recovery in the September quarter,” Michael Smedes, head of the National Accounts at the ABS, said in a statement.

“Despite record quarterly growth in household spending, the level in September quarter was 6.8 percent lower than that recorded in December Quarter 2019.”

Speaking earlier on Wednesday Philip Lowe, the governor of the Reserve Bank of Australia (RBA), said he expected positive GDP growth again in the December quarter.

However, despite Wednesday’s figures technically marking an end to the recession – Australia’s first since 1991 – Lowe said its impacts would continue to be felt in the form of high unemployment.

“These figures, though, cannot hide the reality that the recovery will be uneven and bumpy and that it will be drawn out,” he said in Canberra.

“And even with the overall economy now growing solidly, it will not be until the end of 2021 that we again reach the level of output recorded at the end of 2019.”