Australian economy enters recession for the first time in 30 years

September 02, 2020 13:30

Australia's economy contracted 7% in the second quarter of 2020, dragged down by the advance of the coronavirus pandemic in the country, which had already experienced a decline of 0.3% in the first quarter. It is the first time Australia has entered a recession in nearly three decades.

"This is by far the largest drop in quarterly GDP since records began in 1959", Michael Smedes, Head of National Accounts at the Australian Statistical Office (ABS), said in a statement.

Source: Australian Statistical Office (ABS)

The combined effect of the pandemic and the government's response to the closure of some cities has destabilized not only the national GDP but also other statistics related to the economy. Proof of this is the household savings rate, which increased from 6.0% to 19.8%, driven by the drop in consumer spending.

The Australian dollar has weakened after several days of rising at its cross with the US dollar after the GDP data was released. Yesterday, the Central Bank of Australia announced that it is keeping monetary policy unchanged while expanding the financing facility for financial institutions. In March, the institution cut interest rates to a record rate of 0.25%.

Source: Admiral Markets MetaTrader 5. AUDUSD long-term weekly chart. Date range: December 29, 2013 to September 2, 2020. Prepared on September 2, 2020, at 10 am. Keep in mind that past returns do not guarantee future returns.

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