Coronavirus plunges Australia into recession

Australia tumbled into its first recession for almost three decades with its pandemic-crippled economy shrinking a record seven per cent in the second quarter, official data shows.

With vast swathes of the domestic and global economy shut down to contain the deadly disease, business activity suffered a catastrophic drop — despite authorities providing billions of dollars in support — not even witnessed during the global financial crisis.

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"Today's national accounts confirm the devastating impact on the Australian economy from COVID-19," said Treasurer Josh Frydenberg.

"Our record run of 28 consecutive years of economic growth has now officially come to an end. The cause: a once-in-a-century pandemic," he said.

A commuter wearing a face mask sits in a train during morning rush hour in Sydney, Australia.  File/Reuters

The economy contracted seven percent in April-June from the previous three months, in line with government forecasts, the Australian Bureau of Statistics said. That followed a 0.3 per cent dip. A recession is defined as two consecutive quarters of contraction.

Gross domestic product dropped 6.3 per cent year-on-year.

"The June quarter saw a significant contraction in household spending on services as households altered their behaviour and restrictions were put in place to contain the spread of the coronavirus," said ABS head of national accounts Michael Smedes.

A patient transport vehicle prepares to transport a resident in Melbourne. File/AFP

Hours worked fell almost 10 percent while cash payments of social benefits rose more than 40 per cent, both records, while imports and exports were also down.

The country was already reeling from a prolonged drought and massive bushfires that rattled the economy before the disease struck.

The government has stumped up tens of billions of dollars to fight the economic fallout from the pandemic and Frydenberg said the contraction would have been far worse without such support, which included payments to employers to avoid laying off staff.