Australia was hit by its first recession in 29 years
Australia's economy is suffering from the first recession in nearly three decades, while the nation is struggling with the effects of the coronavirus pandemic.
According to the Australian Statistical Office, the country's economy contracted by 0.3% in the first three months of the year compared to the previous quarter. Treasurer Josh Frydenberg warned on Wednesday that GDP would shrink even more in the April-June period. It will be the second quarter in a row when GDP will decline.
Restrictions and blockades have brought the end of 29 years of economic growth in Australia.
Despite the recession, Frydenberg said Australia "escaped the fate of other countries" thanks to its actions, including efforts to stimulate the economy.
Australia's GDP is likely to "fall" by 9% in the second quarter, according to Ben Udy, an economist at Capital Economics.
"GDP was on the decline even before the virus restrictions were introduced, and is expected to fall even more in the second quarter, then gradually increase in the second half of the year."
, he wrote in a research note Wednesday.
The decline in GDP in the first quarter was mainly due to the fact that consumers reduced their spending on services. Udy expected consumption to be almost 20% below pre-epidemic levels in the second quarter as households stopped panicking about food purchases. There are also restrictions on recreational and retail services.
While rising iron ore prices may support mining investments, non-industry companies have scaled back their investment plans significantly, he said.