Australia roars out of recession and it has Queensland to thank
Australia is technically out of recession with growth in the September quarter jumping 3.3 per cent on the back of massive consumerism, particularly in Queensland and NSW, according to the Australian Bureau of Statistics.
Discretionary spending is drying up (Photo: AAP Image/Dan Himbrechts)
The result was better than most economists had predicted but it is also a product of the huge stimulus the Government initiated which sparked massive household consumption and real estate investment. Economists also warned that there was still a long way to go before Australia had a healthy economy and was still below the growth in the European Union, the US and Japan.
The GDP was $476 billion for the three months to September, which is still well below where it was in December.
In Queensland, the domestic economy (excluding exports) jumped 6.8 per cent – the highest in the nation alongside NSW – and total final consumption was up almost 8 per cent based on a big increase in the three months on spending in hotels, cafes, restaurants, transport, recreation and culture as restrictions were gradually eased in the state.
There was a 24 per cent increase in ownership transfer costs which is related to real estate purchases. Government spending was down for the quarter.
The 3.3 per cent increase in national economic activity followed a 7.3 per cent fall in the June quarter and the Reserve Bank believes that level won’t be recovered until late next year. For the year to September, the economy is still down 3.8 per cent.
Nationally, household spending was up 7.9 per cent, the biggest increase in the 60 year history of the national accounts but it was still only a partial recovery from the 12 per cent fall in the June quarter.
Reduced spending on holiday travel had a significant impact. Health expenditure jumped 26 per cent as elective surgeries resumed.
AMP economist Shane Oliver said the reason Australia’s bounce in recovery was less than other economies was because its fall in the June quarter had not been as great and Victoria’s extended lockdowns had weighed on the recovery.
“Looking forward, better virus control should augur well for continued recovery in contrast to say, the EU, which is likely to contract this quarter,” Oliver said.
The Motley Fool’s Scott Phillips said Australia was out of recession.
“The economy is still uneven and many people and businesses are struggling. But the trajectory is up, and faster and larger than almost anyone dared hoped,” Philips said.
Federal Treasurer Josh Frydenberg said the recession may be over but the recovery was not.
The Business Council of Australia said the bounce back was the result of government leadership, increased activity and renewed private spending.
Chief executive Jennifer Westacott said today’s national accounts numbers were great news for the country reflecting that we went into this pandemic stronger and our leadership has served us well.
“This has built confidence and means we have the benefit of choices in how we rebuild our economy for the future,” Westacott said.
“We are not out of the woods yet. To lock in today’s success, we need to act now to ensure Australia is competitive with the rest of the world, not stuck in the slow lane.
“Only through sustained private sector investment will we see new jobs created and sustained growth.
“Business investment remains stubbornly low. To reverse it we need to make it easier to do business including having the certainty to get new projects off the ground.
“Today’s numbers also show that our closed international borders are hampering our ability to sell our products and services to the world. Exports are critical to our prosperity as a nation, we must continuously advocate for free and open markets.
“Creating new jobs continues to be a priority.
“The government’s record levels of support have protected lives and livelihoods, now is the time to enable the private sector to do the heavy lifting for the recovery – business creates jobs.”