Although Australia is a separate continent from the rest of the world, it was not able to avoid the problems that other countries had faced. Curiously enough, rich in natural resources, prosperous thanks to gainful trade with Asia and vibrant immigration rates, the country managed to avoid a downturn during the 2008 global financial crisis. Yet, the coronavirus outbreak had undermined its economic health.
The second quarter was a taxing time for the country. Australia's GDP fell by 7% compared to the previous quarter. It was the second consecutive quarterly contraction and the sharpest on record since the government began keeping records in 1959. It can mean only one thing: the country plunged into a recession. "Today’s devastating numbers confirm what every Australian knows: that Covid-19 has wreaked havoc on our economy and our lives like nothing we have ever experienced before," Josh Frydenberg, the country’s treasurer, said. Notably, even the most pessimistic forecasts did not suggest such a drastic decline. Economists projected GDP to contract by 5.9%. Compared to the same period last year, the Australian economy shrank by 6.3%. A more detailed review of the quarterly report highlighted a significant drop in consumer spending, which decreased by 12.1% in this period compared to the previous three months. At the same time, spending on goods and services collapsed by 17.6%.
Business investment declined by a record of 4.9%, imports and services shed 12.9 % in the second quarter, and exports fell by 6.7%. In contrast, government spending increased the most since the fourth quarter of 1995, notching a 2.9% rise.
