Australia exits first recession in almost 30 years

SYDNEY • Australia has exited its first recession in almost 30 years, after official figures released yesterday showed the economy grew 3.3 per cent in July-September compared with the 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 per cent compared with the previous quarter.

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," he told lawmakers yesterday.

Australia's economy has yet to fully recover from the coronavirus-fuelled recession, recording a 3.8 per cent slump for the year to September. The return to economic growth followed a 7 per cent decline in the June quarter and a 0.3 per cent dip in the first quarter of this year.

The positive growth comes despite Victoria state - which accounts for about 25 per cent of Australia's economic output - spending much of the September quarter in one of the world's strictest lockdowns, curtailing economic activity there.

Economic shutdowns to curb the spread of Covid-19 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 programme, pumping billions into the economy to avert a full-blown depression.

Last month, the Reserve Bank of Australia cut interest rates to a record low of 0.1 per cent to help hasten the recovery.

Higher unemployment is set to linger, with the jobless rate rising to 7 per cent in October.

Closed borders continue to drag on the economy, with trade detracting 1.9 percentage points from gross domestic product in the September quarter as exports fell due to weaker demand for Australian mining commodities and travel restrictions.

The country has been relatively successful in its pandemic health response, recording just under 28,000 cases and over 900 deaths.

AGENCE FRANCE-PRESSE

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A version of this article appeared in the print edition of The Straits Times on December 03, 2020, with the headline Australia exits first recession in almost 30 years. Subscribe