|Thursday, Australia warned that its economy shrank at its fastest pace in history during Q-2, while the budget deficit will be the biggest since WWII as the country battles to contain the impact of the C-19 coronavirus.|
The government has pumped tens of billions of AUDs to fight the medical emergency chaos, which has ravaged global trade and forced the shutdown of much of the country earlier in the year, crippling the economy.
The reimposition of a 6 wk lockdown on 5-M people in Melbourne, the 2nd-biggest city, has added to the struggles for a country already reeling from a prolonged drought and massive bushfires before the virus struck.
Officials said GDP would contract 7% in the April-June frame, pushing the economy into recession for the 1st time in 30 yrs.
Treasurer Josh Frydenberg said the budget deficit would blow out to A$185-B (US$132-B), about 10% of GDP in the year to 30 June 2021, having hit A$86-B in the prior 12 months.
“These harsh numbers reflect the harsh reality we face,” Mr. Frydenberg said. “The economic outlook remains very uncertain.“
Much of the forecast deficit comes from massive stimulus spending designed to keep the economy afloat and prevent a full-blown economic depression.
The government has rolled out around A$289-B in economic stimulus to cushion the country from the virus fallout, including support for workers, businesses and retirees.
Unemployment now at 7.4% is expected to peak at 9.3% in December.
The Australian dollar (AUD) dipped 0.3% Thursday, while shares on the S&P/ASX 200 were flat to unchanged.
The government is predicting a quick recovery with the economy returning to growth in Q-3 as easing virus restrictions bring increased activity.
Mr. Frydenberg predicted GDP would grow 2.5% in Y 2021, partially based on the assumption that international borders would open from 1 January.
Note: Australia has recorded more than 13,000 cases of C-19 coronavirus and 133 deaths from the virus.
The government is expected to deliver its budget in full in October, while economic growth figures are released in September.
Have a healthy day, Keep the Faith!