'Further difficult days ahead': Virus-hit Australia goes into recession
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As the government was trying to put out the fire, the pandemic struck. Australia, like the rest of the world, went into lockdown.
The Australian economy used to run tirelessly. It even set a record with 28 consecutive years of growth. That great run has now officially come to an end.
The cause, a once-in-a-lifetime pandemic. The effect, a Wuhan virus-induced recession.
Australian Prime Minister Scott Morrison said: "Australians know, Mr. Speaker, that many, many months ago that this day would come, and this day has come. And, Mr. Speaker, as the pandemic continues to have its impact, not just here, Mr. Speaker, but all around the world, there will be further difficult days ahead."
Even before the pandemic, the Australian economy was stuttering. Bushfires raged over 12 million hectares--- crashing tourism and hurting businesses.
As the government was trying to put out the fire, the pandemic struck. Australia, like the rest of the world, went into lockdown.
In the January to March period, the GDP contracted by 0.3 per cent.
In the April to June period ----- it contracted by 7 per cent.
The two consecutive quarters of negative growth have pushed Australia into a recession.
It's first since 1991. Even the global financial crisis in 2008 could not hurt Australia. It was the only major economy to avoid a recession.
But, the pandemic has dealt the lethal blow. Australia has lost its famous tag of 'the lucky country'.
Nearly one million Australians have lost their jobs. The government has pumped close to 150 billion dollars as an economic stimulus.
Australia has done better than most of the major economies in controlling the virus outbreak.
But, the second wave of infections in the state of Victoria is likely to delay economic recovery.
Australian treasurer said: "It's important to recognize that this fall in the june quarter does not include the economic impact from the stage four restrictions imposed by the Victorian government in early August. This is something that will weigh heavily on the september quarter numbers."
Australia has fared better than most advanced economies. But the road ahead will be full of hurdles.
ustralia relies excessively on its largest trading partner, China. Steady exports of coal, iron and other natural resources to China, contribute to Australia's consistent growth.
But now China has slapped tariffs. After Australia called for a probe into the origins of the Wuhan virus.
Australia's problems are both external and internal. The time is right for a hard reset ----- both economically and politically.