Australia has exited its first recession in almost 30 years, after official figures on Wednesday, December 2, showed the economy grew 3.3% in July-September compared with the coronavirus-hit 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% compared with the previous quarter.
Treasurer Josh Frydenberg said the figures “can give Australians cause for optimism and hope,” declaring that Australia “has performed better on the health and on the economic fronts than nearly any other country in the world.”
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.
Australia’s central bank has predicted the economy will not return to pre-pandemic levels until the end of 2021.
The economy has yet to fully recover from the coronavirus-fueled recession, recording a 3.8% slump for the year to September.
The return to economic growth followed a record 7% decline in the June quarter and a 0.3% dip in the 1st quarter of 2020.
A recession is generally defined as two successive quarters of economic contraction.
The return to growth comes despite Victoria state – which accounts for about 25% of Australia’s economic output – spending much of the September quarter in one of the world’s strictest lockdowns, curtailing economic activity.
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 program, pumping billions into the economy to avert a full-blown depression.
“There is a lot of ground to make up and many Australian households and many Australian businesses are doing it tough – very tough,” Frydenberg said.
“Many challenges do remain,” he added. “The global economic environment remains uncertain as many nations experience an increase in COVID-19 cases and new lockdowns.”
Higher unemployment is expected to linger in Australia, with the jobless rate rising to 7% in October.
Closed borders continue to drag on the economy, with exports falling 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 response, recording just under 28,000 cases and 908 deaths. – Rappler.com