SYDNEY: Australia’s GDP tumbled 7 per cent from the first three months of the year, the largest fall since records dating back to1959, the statistics bureau said on Wednesday.
The slump was larger than economists’ forecasts of a 6 per cent drop. The figure underscores the need for unprecedented stimulus measures as the recovery from the nation’s first recession in almost 30 years is exacerbated by Victoria state’s renewed Covid-19 outbreak and lockdown.
Australia’s early lifting of restrictions and reopening of its economy is now being offset by an almost two-month lockdown in Melbourne, the nation’s second-largest city with about five million people, delaying the economy’s recovery.
Supporting economy
The Reserve Bank of Australia (RBA) and government are working together to try to support the economy. The former has kept its cash rate near zero and set a target of 0.25 per cent on the three-year government bond yield while the latter is extending its labour market assistance package.
The RBA predicts Victoria’s renewed lockdown will lift national unemployment to about 10 per cent later this year. The government has injected tens of billions of dollars into the economy including its JobKeeper wage subsidy programme designed to keep workers attached to firms as it tries to maintain employment connections until activity can resume.