COVID-19 pandemic-induced lockdowns caused Australia’s economy to shrink 1.9 percent in the third quarter on a quarterly basis, a downturn that bucked the trend of a steady recovery in other wealthy nations.
On an annual basis, GDP was still up 3.9 percent in the quarter.
The Australian Bureau of Statistics yesterday reported the country’s second quarterly contraction since the pandemic began — and one of the largest contractions on record — sparked by long-running containment measures in populous states.
Sydney, Melbourne and Canberra were all closed for chunks of the quarter, causing households to spend dramatically less on services.
There was a 21 percent drop in spending on hotels, cafes and restaurants, and a 40 percent decline in spending on transport.
The downturn was out of step with other major economies, such as Canada, India, Japan, the US and the eurozone, which all saw growth during the period as they reopened for business.
Economists had forecast a 2.8 percent contraction, but increased exports appear to have come to the rescue — buoyed by high coal and gas prices.
The economy is widely expected to bounce back in the final quarter of the year.
“These data show the significant disruption caused by lockdowns in the two largest states, they are now firmly in the rear-vision mirror,” National Australia Bank chief economist Alan Oster said.
Indicators of more recent activity suggest “a very solid rebound is already under way,” he added.
The latest figures will further raise concern about the potential impact of the Omicron variant, with Moody’s Investor Service yesterday warning that the new strain “poses new risks to the global economic growth and inflation outlook.”
The Reserve Bank of Australia has predicted that while the economic recovery has been “uneven,” economic “confidence has held up reasonably well.”
“In our central scenario, the economy will be growing again in the December quarter and is expected to be back around its pre-Delta path in the second half of next year,” it said.
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