Treasurer: ‘Yes, Australia is in recession’
The Treasurer has confirmed the economy is in recession now, and is facing an even worse downturn in the next quarter.
When asked if Australia is in recession, Mr Frydenberg said "the answer to that is yes, and that is on the basis of the advice that I have from the Treasury Department about where the June quarter is expected to be."
"The June quarter, the economic impact will be severe. Far more severe than what we have seen today," Mr Frydenberg said.
The Australian economy went backwards in the three months to the end of March - the first quarter of contraction in nine years.
A recession is defined as two consecutive quarters of economic contraction.
Official figures released by the Australian Bureau of Statistics this morning showed Gross Domestic Product (GDP) shrank by 0.3 per cent in the March quarter as the coronavirus crisis began to take hold.
That is the first negative result since March 2011.
On average, economists had been expecting a result of -0.4 per cent.
For the 12 months to the end of March, GDP growth was 1.4 per cent, the ABS said.
"This was the slowest through-the-year growth since September 2009 when Australia was in the midst of the Global Financial Crisis and captures just the beginning of the expected economic effects of COVID-19," ABS chief economist Bruce Hockman said today.
Despite the news, Mr Frydenberg hailed the Australian economy's "remarkable resilience" despite the fact that the economy has had the first contracted quarter in nine years.
Mr Frydenberg said that in context of the economic downturn of the previous months, including from travel restrictions and business closures, it is a good sign that the GDP only fell by 0.3 per cent.
"When combined with the ongoing drought, which saw farm GDP fall by 2.4 per cent in the quarter, and the devastating impact of the fires that were raging across many states, one looks back on the March quarter, and there wasn't much good news," Mr Frydenberg said.
"Seen in this context, the fact that the Australian economy only contracted by 0.3 per cent shows the Australian economy's remarkable resilience," he said.
The Treasurer framed the 0.3 per cent contraction as being much smaller than other countries, thanks to the "economic strength" of the pre-coronavirus Morrison government.
"Indeed, Australia's performance in the March quarter compares very well to that seen in other nations, with negative growth of 9.8 per cent in China, 5.3 per cent in France, 2.2 per cent in Germany, 2 per cent in the United Kingdom, and 1.3 per cent in the United States."
On Tuesday, Reserve Bank of Australia Governor Philip Lowe said the depth of the current decline might be less than first thought.
"The Australian economy is going through a very difficult period and is experiencing the biggest economic contraction since the 1930s," Dr Lowe said.
"Notwithstanding these developments, it is possible that the depth of the downturn will be less than earlier expected.
"The rate of new infections has declined significantly and some restrictions have been eased earlier than was previously thought likely," Dr Lowe said in a statement explaining the RBA's decision to leave its cash rate unchanged at a record low of 0.25 per cent.
"And there are signs that hours worked stabilised in early May, after the earlier very sharp decline. There has also been a pick-up in some forms of consumer spending."
Originally published as Treasurer: 'Yes, Australia is in recession'