The Australian economy experienced the largest contraction in its history in the second quarter due to the impact of the coronavirus health crisis, increasing pressure on the government, while the appearance of new sources of contamination raises fears of difficulties additional.

According to official data released on Wednesday, September 2, Australia's gross domestic product (GDP) declined by 7% during the April-June period.

On an annual basis, the GDP marked in the second quarter a decline of 6.3%, while decision-makers expected growth of 2.75%.

The impact of the Covid-19 pandemic

It is the sharpest quarterly contraction ever suffered by the Australian economy, whose extraordinary growth was not even interrupted by the global financial crisis of 2008, the Australian Bureau of Statistics (ABS) said. 

Michael Smedes, senior official at ABS, explained that the pandemic, and the measures taken to combat the coronavirus, were responsible for this "unprecedented" contraction which "largely" sinks previous records.

A country goes into recession when it lines up two negative quarters, and Australia's GDP had fallen 0.3% between January and March.

The second quarter figure is fully in line with government forecasts.

“The quarter that ended in June was marked by a significant contraction in household spending on services as households changed their behavior as restrictions were decided to contain the spread of the coronavirus,” said Michael Smedes.

The number of hours worked has fallen by almost 10% while the amount of social benefits has climbed by more than 40%.

Trade was also weighed down in the second quarter, which was marked by a drop in goods imports of 2.4% and a fall in services exports of 18.4%.

The government has released tens of billions of dollars to mitigate the economic impact of the outbreak, but the economy has been hit hard by the relative containment of a few months ago.

A second epidemic wave concentrated in Melbourne

Australia recorded less than 100 new cases of coronavirus on Monday, for the first time in two months, which gives hope for a lasting ebb of the second epidemic wave, which has concentrated in the Melbourne region.

The state of Victoria, of which Melbourne is the capital, recorded only 73 new cases on Monday, while at the height of the crisis, at the end of July, more than 700 new infections appeared in 24 hours.

Restrictions have been imposed for several weeks on residents of the city, including a nighttime curfew and the closure of all non-essential businesses until September 13.

State Prime Minister Daniel Andrews announced that he would present a roadmap on the stages of deconfinement on Sunday, specifying that the easing of restrictions would be gradual.

The borders between the state and the rest of the country should, however, remain closed after deconfinement.

Most of the other states do not, or very little, register new contaminations.

The neighboring state of New South Wales is currently the most affected after Victoria.

Ten new cases were thus identified Monday in this state of which Sydney is the capital.

A total of nearly 26,000 cases have been recorded in Australia, a country where 663 people have died from the coronavirus.

With AFP and Reuters

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