Covid effect : Australia plunged into recession after 30 years; GDP shrank 7%

World is going through vulnerable times as every economy (biggest or smallest) are facing turmoiling facets of time.

Pandemic has indeed changed the face of the world markets and faded its shimmer. Australia also among the ones plunged into its first ever recession in 30 years.

“Economy fallout due to Coronavirus” seems to be the scariest nightmare or the constant hinder of every country.

Reportedly, 7% GDP shrank down in the April to June Q1 FY20 as compared to last few months. Experts call it the biggest fall since 1959. An economy will be finally categorised into recession if it’ll continue to fall in the upcoming quarters.

Credits : Statista

Well, Australia was the only country to avoid 2008 Global Financial Crisis because the country was in high demands to avail natural resources to China.

As the year started, Australians faces major bushfires which challenged the economy, affected the tourism then followed by Coronavirus Pandemic. Recently shutting down of several business firms have affected the economy despite having support from government and Central Bank.

This seems to the severe Australia has ever faced, increasing downfall in people’s purchasing power due to severe contraction in household spending on goods and services are the major causes.

According to BBC reports, “2020 will go down as a year to remember and a year everyone is already trying to forget! It’s the year Australia technically lost its famous nickname as ‘The Lucky Country’ and fell into recession for the first time in almost three decades.”

Here are some reasons led to plunge in recession : 
  • Australia closing borders and imposed strict rules and regulations.
  •  Thousands of small business lost months of essential seasonal revenue.
  •  1 million people lost their jobs as a result.
  • Canberra and Beijing have exchanged political jabs and the Australian economy has felt the pinch.
  • Australia has 7% shrank as compared toThe US economy, the world’s biggest, shrank 9.5% between April and June while the UK’s shrank by 20.4% pushing it into recession as well. France’s economy fell by 13.8% and Japan’s by 7.6%.

Scott Morrison said, “Australia has far better than many other nations around the world in controlling the virus.”

Also Read : Australian economy tumbles at fastest pace since Great Depression due to COVID-19