The datas from the Australian Bureau of Statistics says that Australia has fell into its deepest economic slump. This had happened because majority of the business activities were paralysed because of the Covid-19 pandemic.
As per the stats, the country’s A$2 trillion economy shortened 7% in three month’s time to the end of June from a 0.3% decline in the March quarter.
Now the Australia joins the US, Japan, UK and Germany in technical depression. This kind of a downfall haven’t happened in Australia since 1991.
The Treasurer Josh Frydenberg said that this crisis is like no other.
“Today’s national accounts confirm the devastating impact on the Australian economy from Covid-19. Our record run of 28 consecutive years of economic growth has now officially come to an end,” he added.
Frydenberg believes that the financial stimulus will keep following their commitments towards Australian people. “our commitment to the Australian people is that we have your back. We will be with you through this crisis and…all the way out of this crisis.”
The reduction, which was vital than median forecasts of 5.9%, comes as Australia’s second most-populous state of Victoria remains in a lockdown to curb the spread of the coronavirus while international borders are shut too.
The September quarte GDP could also weigh heavy because of the Victoria’s lockdown, Frydenberg said.
Almost a million people and more have turned jobless since March. This was when the country shutdown their entire sectors of the economy.
The Government tried to cop up with the situation by setting more than A$300 billion of stimulus, though today’s low data underlines the need for more stimulus as the recovery is expected to be not that smooth.
The GDP is declined by 6.3% on an annual basis.
The chief economist for BIS Oxford Economics, Sarah Hunter, said that while looking ahead, it is clear that the path back from the Covid-19 recession will be protracted.
She also said that “Growth in the September quarter will be weighed down by the lockdown in Victoria, and beyond this continued health concerns, ongoing restrictions and the dialling back of income support will all weigh on the economy,”
“We expect it to take until early 2022 for activity to return to pre-pandemic levels,” she added
Recently in an emergency meeting the Reserve Bank of Australia (RBA) slashed interest rates to a record 0.25% and expanded its cheap funding facility for the country’s lenders to keep low-cost credit flowing in the economy.
The bank has also assured to offer additional support if needed.