- Australia has tabled economic growth for the first time since March as coronavirus restrictions begin to ease across the nation
- According to the Australian Bureau of Statistics (ABS), the country’s GDP jumped 3.3 per cent during the September quarter
- It’s a sharp about-face from the June quarter’s record 7 per cent decline
- Despite the turnaround, spending is still down as Australia enters the Christmas season — overall, GDP growth is down 3.8 per cent in 2020 compared to the year before
- And while there’s growth in the September quarter, Reserve Bank Governor Philip Lowe expects high unemployment to hang around for several years
- Promisingly, however, the RBA chief believes Australia will record positive GDP growth in the current quarter as well
Australia has tabled economic growth for the first time since March as coronavirus restrictions begin to ease across the nation.
According to the Australian Bureau of Statistics (ABS), the country’s GDP jumped 3.3 per cent during the September quarter — a sharp rise from the June quarter’s record 7 per cent decline.
The ABS chalks the growth up to easing COVID-19 related restrictions — state borders are starting to reopen and Melbourne has now gone a month with no new coronavirus cases.
Despite the GDP surge, economic activity is still down as Australia heads into the busy season. Overall, GDP has declined by 3.8 per cent over 2020 compared to the year prior.
And while there’s been growth in the September quarter, Reserve Bank Governor Philip Lowe expects high unemployment to persist in the years to come.
“These positive figures … cannot hide the reality that the recovery will be uneven and it will be bumpy and it will be drawn out. Some parts of the economy are doing quite well, but others are in considerable difficulty,” the RBA chief stated today.
“Australia is likely to experience a run of years of relatively high unemployment, unemployment being too high and wage increases and inflation being too low, leaving us short of the Reserve Bank’s goals,” he continued.
Nevertheless, the Reserve Bank Governor predicts the September quarter’s stellar growth is a good sign for the December period.
“Given these developments, we are now expecting GDP growth to be solidly positive in both the September and December quarters. And then, next year, our central scenario is for the economy to grow by 5 per cent and then 4 per cent over 2022,” he stated today.
Breaking down today’s figures, the ABS highlighted a near 8 per cent rise in household consumption — a sector which makes up more than half of the country’s economy. Overall, however, spending remained week — down 6.5 per cent throughout the year.
On the other hand, services spending rose almost 10 per cent as governments relax social distancing measures, meaning transport, hotel, and restaurant spending rebounded. In addition, health expenditure rose again as delayed elective surgeries went back on the books.
All in all, the RBA Governor believes the surge bodes well for Australia’s economy, but acknowledges there’s a long stretch ahead of a full recovery.
“Even with the overall economy now growing solidly, it will not be until the end of 2021 that we again reach the level of output recorded at the end of 2019,” he surmised.