The Australian Gross Domestic Product fell 0.3 per cent in seasonally adjusted, chain volume terms in the March quarter 2020 and growth slowed to 1.4 per cent through the year, according to figures released by the Australian Bureau of Statistics (ABS) today.
Chief Economist for the ABS, Bruce Hockman, said: “This was the slowest through-the-year growth since September 2009 when Australia was in the midst of the Global Financial Crisis and captures just the beginning of the expected economic effects of COVID-19.”
The Australian economy was impacted by a number of significant events this quarter, starting with bushfires and other natural disasters, followed by the outbreak of COVID-19 and the subsequent imposition of restrictions. The government responded with the introduction of economic stimulus and support packages. The ABS has published a series of spotlight articles highlighting some areas in the economy where these events had more significant impacts.
Public demand contributed 0.3 percentage points to GDP, driven by a 1.8 per cent rise in government final consumption expenditure.
"Government spending at all levels increased in response to the bushfires and the management of the COVID-19 pandemic."
Private demand detracted 0.8 percentage points from GDP, driven primarily by a 1.1 per cent fall in household final consumption expenditure. Spending on services fell significantly, particularly where restrictions impacted most severely, such as air transport services, hotels, cafes and restaurants, recreation and culture. Spending on goods rose, most notably in food and pharmaceuticals, as households prepared for the introduction of restrictions.
Net Trade contributed 0.5 percentage points to GDP. Imports of goods fell 3.9 per cent, with falls in consumption and capital goods reflecting weak domestic demand. Imports of services fell 13.6 per cent, with travel services falling sharply in response to the global outbreak of COVID-19 and associated travel bans. Exports of services declined 12.8 per cent, with restrictions on overseas arrivals reducing education related travel and tourism in Australia.
The household saving to income ratio rose to 5.5 per cent, reflecting a rise in gross disposable income and falls in consumption. Gross disposable income was driven by a 6.2 per cent increase in social assistance benefits due to both an increase in the number of recipients and the introduction of new government support packages in response to COVID-19 and bushfires.
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