Australia enters first recession since 1991 after coronavirus pandemic takes toll on economy

The country was already reeling from a prolonged drought and massive bush fires that had rattled the economy before the disease struck

Trade also took a hit during the quarter, with imports of goods down 2.4 per cent and exports of services dropping 18.4 per cent

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The government has stumped up tens of billions of dollars to fight the economic fallout from pandemic. Photo: Reuters

Published: 12:00pm, 2 Sep 2020Updated: 4:36pm, 2 Sep 2020

Australia has entered its first recession since 1991 after the economy shrank 7 per cent in the second quarter, official figures showed on Wednesday, as the country reels from the coronavirus pandemic.

The Australian Bureau of Statistics said it was the fastest quarterly contraction on record and ends a three-decade run of economic growth that was undented even by the global financial crisis.

The bureau’s head of national accounts, Michael Smedes, said the pandemic and containment efforts were to blame for the “unprecedented” drop that exceeded previous records “by a wide margin”.

A recession is defined as two consecutive quarters of contraction. Australia’s economy shrank 0.3 per cent in the previous three months.

The widely expected result is in line with earlier government predictions that gross domestic product would contract 7 per cent in April-June.

“The June quarter saw a significant contraction in household spending on services as households altered their behaviour and restrictions were put in place to contain the spread of the coronavirus,” Smedes said.

Hours worked fell almost 10 per cent while cash payments of social benefits rose more than 40 per cent, both records for the country.

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Australia enters first recession since 1991 after coronavirus pandemic takes toll on economy

The country was already reeling from a prolonged drought and massive bush fires that had rattled the economy before the disease struck Trade also took a hit during the quarter, with imports of goods down 2.4 per cent and exports of services dropping 18.4 per cent

The country was already reeling from a prolonged drought and massive bush fires that had rattled the economy before the disease struck

Trade also took a hit during the quarter, with imports of goods down 2.4 per cent and exports of services dropping 18.4 per cent