Australia is set to release its worst set of economic growth figures in at least 60 years and confirm it is suffering the first recession since the early 1990s.
Economists expect the national accounts for the June quarter on Sept 2 to show an economic contraction of around six percent, driven by COVID-19 restrictions and lockdowns.
This will follow a more modest 0.3 percent decline in the March quarter, when coronavirus first hit Australia’s shores, and confirm a technical recession of two consecutive negative quarters of growth.
Finance Minister Mathias Cormann said Australia had weathered the coronavirus crisis better than most other countries.
“In all of the circumstances, Australia is performing comparatively better than most others,” he told reporters in Canberra.
“We are going to have to continue to do everything we can to get ourselves back into the best possible position.”
The downturn has already seen the number of people unemployed push past more than one million for the first time.
Treasury has warned a further 400,000 Australians could join the dole queue before Christmas, partly as a result of Victoria’s harsh lockdown.
The June quarter result is expected to include a collapse in household consumption, weak building construction and a slump in business investment.
On the plus side, exports will make a strong contribution, as will government spending.
RBC Capital Markets head of strategy Su-Lin Ong said the national accounts for the June quarter would be more backward-looking than usual, given the dynamics of the coronavirus pandemic.
Some economists are concerned the September quarter could produce a third negative result due to the lockdown in Victoria, with the state accounting for a quarter of national output.
But at this stage, ANZ senior economist Felicity Emmett expects the economy will expand modestly, with the re-opening of businesses in other states offsetting the Victorian slump.
However, the December quarter will prove more challenging, when support payments are wound back.
“We expect though that the government will be keen to avoid a negative quarter, and anticipate a boost in stimulus measures in the October budget,” Emmett said.
That approach would help to support growth in both the December quarter and over the medium term.
By Colin Brinsden in Canberra