Federal Treasurer Josh Frydenberg has confirmed Australia is now in a recession after 29 consecutive years of economic growth.
The Australian economy shrank 0.3 per cent in the March quarter amid bushfires and the early stages of the coronavirus pandemic.
Treasurer Josh Frydenberg, speaking after the release, accepted this fate when asked directly whether the economy is now in recession. "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", he said.
The result sets up an end to Australia's record run of avoiding two consecutive quarters of shrinking GDP - the definition of a recession - having dodged them during the 1997 Asian Financial Crisis, the Dot-Com Bubble and the global financial crisis.
"Is Australia in recession today?"
"Not through crisis yet, hard days ahead".
"Less than 100 days ago, our nation was on the edge of an economic cliff", he said.
The Reserve Bank of Australia (RBA) has recently sounded less gloomy about the economy even though the country is in the midst of its worst downturn since the Great Depression as better health outcomes led to an earlier-than-expected re-opening of businesses.
"We now expect the peak-to-trough fall in GDP to be significantly less than 10 percent". "Continued support from fiscal and monetary policy will be necessary throughout 2020 and beyond".
Frydenberg said the government would provide an update on the economy and stimulus programs in July.
Government spending jumped 1.8 per cent, adding 0.3 percentage points.
"Households are absorbing higher unemployment, elevated job insecurity, falling house prices, concerns about a second Covid-19 outbreak, all against a backdrop of already high debt levels".
Household consumption was the biggest drag on growth last quarter with massive falls in spending on clothing, cars, transport, recreation, hotels, cafe and restaurant.
"While fear of a lockdown saw panic-buying of food and household items, total consumption still fell by 1.1 per cent in the quarter", he said.
Some economists had speculated that last minute buying might save the economy from going backwards in the March quarter that only includes a few weeks of business shutdowns.