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3 June, 2020

Treasurer Josh Frydenberg confirms Australia is in a recession.

Treasurer Josh Frydenberg has confirmed that Australia is in a recession.

By Phil Brandel

Treasurer Josh Frydenberg has confirmed that Australia is in a recession.

GDP figures from the Bureau of Statistics show Australia's economy shrank 0.3 per cent in the March quarter, amid bushfires and the early stages of the coronavirus pandemic.

A recession is generally defined as two consecutive quarters of GDP decline.

Mr Frydenberg says the June quarter will be “far more severe than we have seen today”.

This makes it certain that Australia will suffer its first recession in 29 years, as the full impact of coronavirus-related shutdowns occurred during the current June quarter.

The combined devastation of the bushfire season and the ongoing coronavirus pandemic are being cited for the economic downturn.

The last time Australia recorded two consecutive negative quarters for GDP was March and June 1991.

The Treasurer said the easing of coronavirus restrictions will encourage Australians to return to their normal spending habits and encourage business owners to scale back on their reliance on JobKeeper "The fact that those restrictions are now being eased and they can have customers come through the door will mean that that transition off that support will be easier for a business like that,” he said.

While admitting that Australia is now in recession, Treasurer Josh Frydenberg said it could have been a lot worse.

"Treasury was contemplating a fall in GDP of more than 20 per cent in the June quarter. This was the economists' version of Armageddon," Mr Frydenberg said.
"Today’s National Accounts shows the remarkable resilience of the Australian economy in the face of a 1 in a 100-year pandemic. Australia has avoided the health & economic fate of many other nations. While there will be difficult days ahead, we can be confident about our future."

According to the ABS, even before the full effect of the coronavirus hit, Australia's economy recorded its slowest annual growth in more than a decade.

"This was the slowest through-the-year growth since September 2009, when Australia was in the midst of the global financial crisis and captures just the beginning of the expected economic effects of COVID-19," the bureau's chief economist, Bruce Hockman, said.

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