Pandemic brings 1st Australian recession in 29 years
The coronavirus pandemic pushed Australia's economy into recession for the first time in 29 years in the first quarter of the year, and the situation is expected to get worse.
Treasurer Josh Frydenberg said Wednesday the current June quarter will be the second in a row in which the Australian economy has contracted.
A recession is defined as at least two straight quarters of contraction. Data released on Wednesday showed the economy shrank 0.3% in the January-March quarter due to destructive wildfires and the early stages of Australia's coronavirus lockdown.
Weak household consumption was a major factor behind the decline, as millions have lost their jobs.
"The June quarter, the economic impact, will be severe. Far more severe than what we have seen today," Frydenberg told reporters.
The Australian government has promised more than $220 billion in stimulus spending and the central bank has cut its benchmark interest rate by a quarter of a percentage point to a record low of 0.5% to help cushion the shock from the pandemic.
Australia's economy has been growing since mid-1991 with an occasional negative quarter including during the global financial crisis in 2008, when Chinese demand for iron ore and coal quickly reversed the decline.
The slowdown in China's economy, on top of weakening global demand and the impact of the pandemic, has pushed many countries into their worst downturns in decades.