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Summary
- New figures suggest that September quarter indicated a surplus of 3.3 per cent, while overall numbers still show a 3.8 per cent downfall in annual stats.
- Technically speaking, Australia is out of recession because it showed positive numbers after six months of the pandemic backlash.
- On the other hand, some economists think that almost a million unemployed people suggest the crisis is still not over.
The Australian economy officially showed enough evidence that it has bounced back from recent recession figures by offering a 3.3 per cent increase in overall GDP in the September quarter.
The growth is expected to be even higher in the following weeks as most states have reopened their borders. Victoria is back on its feet, and Australians have injected significant amounts of money in local businesses.
According to the Australian Bureau of Statistics, a total of 960,900 people nationwide remained unemployed in October. Yet, the numbers reflect optimism compared to July, when there were 1,008,300 individuals with no work.
Citing the latest GDP statistics, Treasurer Josh Frydenberg announced that Australia was “technically out of recession”, but it did not imply that the country had recovered from the crisis.
He added that the nation had collectively shown ‘resilience’ and was demonstrating optimistic signs of healing. He cautioned that the country needed to overcome the real crisis in the following months, or it could even take years.
Shadow Treasurer Jim Chalmers added that almost a million Australians were still feeling impacts of the recession, as they have remained jobless ever since. Mr Chalmers also opined that financial numbers on the ABS website were not the most important, rather the overall concern that residents feel.
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What were the initial predictions?
Financial experts thought that the September quarter would see a 2.5 per cent surge, while recent figures outperformed initial expectations (3.3 per cent).
Moreover, the annual fall in the GDP levels was predicted to remain at 4.4 per cent. However, the contraction is showing a 3.8 per cent lesser dip.
As it is still early to know for sure, professionals have estimated a 2 per cent gain in December quarter. They are optimistic about the overall results due to significant tax cuts worth A$7 billion, A$850 million for JobMaker, and A$1.5 billion worth business investments.
RBA Governor Philip Lowe said the Australian economy had surprised the entire nation, even in terms of unemployment. The reserve bank now expects the unemployment rate to be somewhere between seven and eight per cent.
The high GDP numbers are thought to be primarily influenced by a rise in consumption levels. According to data, household consumption grew to 7.9 per cent, performing a lot better than scientists thought.
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Can Australia say it is out of recession?
While some economists may be overly confident after seeing positive numbers, others fear that recession is far from over.
Given the recent figures, the whole situation looks optimistic. However, the definition of a recession may be flawed.
Separate financial quarters are genuinely showing an increase in GDP, but annual records are saying that Australia is still not seeing a surplus on those levels.
As per CommSec Chief Economist Craig James, taking into account the impact on society becomes imperative when talking about recessions, mostly jobless individuals.
Meanwhile, the treasurer has highlighted that the private sector would play a crucial role in moving the economy forward, as private entities create most job opportunities and show significant expansion.
