Australia is officially in its first recession for 30 years, according to figures from the Treasury, although Treasurer Josh Frydenberg said the country has avoided an economic ‘Armageddon’.
In a speech on Wednesday, Treasurer Josh Frydenberg said the Australian economy contracted 0.3% during the March quarter.
This was caused by a combination of the COVID-19 pandemic and the summer bushfires.
He also confirmed it was likely the recession would continue into the June quarter.
Frydenberg said: “We were on the edge of the cliff. What we were facing was an economist’s version of Armageddon. We have avoided the economic fate, and the health fate, of other nations because of the measures that we have taken as a nation.
“The National Cabinet set out a three-step plan for removing restrictions, which Treasury forecasts, once done, will deliver about $1.4 billion to the economy and see 50,000 people get back to work.
“For the June quarter, the economic impact will be severe. Far more severe than what we have seen today.”
There would now be a mini-Budget on 23 July to allow the Treasury to provide an update on the three-step plan and the outcome of the JobKeeper review. The full Budget was rescheduled from May until October.
AMP chief economist, Shane Oliver, said: “While the COVID-19 crisis has caused Australia to enter a recession (which will be confirmed with the June quarter gross domestic product data) and broken the record 28 years without a ‘technical recession’, Australia’s relatively good handling of the virus and supportive economic policies will mean that Australia comes out of the crisis in better shape compared to many of our global counterparts.
“There are of course risks to the outlook – the end of the JobKeeper/JobSeeker payments and end of mortgage deferral holidays at the end of September mean there will be a big hit to consumer incomes. However, whether this is a major problem or not will depend on how quickly demand springs back and how quickly those who have lost their job can find another one.”