WA’s domestic economy contracted 6 per cent in the June quarter, slightly better than national figures showing Australia is in recession.
WA’s domestic economy contracted 6 per cent in the June quarter, slightly better than national figures showing Australia is in recession.
That massive decline in state final demand, which measures the economy minus trade, was better than a 7 per cent fall in GDP nationally (both numbers in seasonally adjusted terms), according to the Australian Bureau of Statistics.
National GDP fell 0.3 per cent in March, while WA's state final demand had grown 0.9 per cent.
Two consecutive quarters of negative GDP growth constitute a technical recession.
The national numbers are better than an expected fall of as much as 10 per cent projected by the Reserve Bank of Australia early in the COVID-19 pandemic.
WA performed better than NSW and Victoria, while South Australia and Queensland both posted stronger results.
Household spending was down about 11 per cent in the quarter WA, but some categories were up.
Purchases of alcoholic beverages were up 13 per cent, furnishings and household equipment up 13 per cent, and communications was up 1.7 per cent.
Business investment fell 4 per cent in the quarter.
Homebuilding dropped 11 per cent, and research and development spending declined 13 per cent.
Treasurer Ben Wyatt said WA had outperformed other states over the financial year in its entirety.
"The economic impact of COVID-19 is certainly the most significant in our lifetimes,” Mr Wyatt said.
“However, today's economic figures show our proactive economic response is protecting our economy.
"Our hard border has allowed us to open up our domestic economy sooner, to restore confidence and allow businesses to restart and Western Australians to get back to work.
"As other States have discovered, and today's results highlight, taking a more reactive approach to suppress outbreaks as they emerge, is incredibly risky not only to public health but the economy.
"Constantly changing the rules to deal with outbreaks is bad for business confidence and, in turn bad, for the economy as we have seen in States with open borders.
National
Commsec chief economist Craig James said it was the biggest quarterly national drop since records began, and confirmed Australia was in recession.
“This is not your typical recession,” he said.
“It hasn’t occurred because there has been some policy mistake, like the Reserve Bank of Australia leaving interest rates too high.
“Inflation remains under control, prices are neither surging or plunging.
“There has been no balance of payments crisis, record trade surpluses are being reported.
“And the federal budget was broadly balanced at the start of 2020.
“Rather the recession is the result of a community lockdown to battle a one-in-a-hundred-year pandemic.
“And the whole world has been similarly affected.”
Deloitte Access Economics senior economist Sheraan Underwood said few big economies had endured less damage than Australia.
“The underlying equation is simple,” he said.
"The greater the success against the virus, the greater the success in protecting economies against the pandemic.”
Yesterday, the RBA topped up its term funding facility, which has underpinned bank loans to small businesses, increasing the cap to $200 billion.
“Globally, an uneven economic recovery is under way after a very severe contraction in the first half of 2020,” governor Philip Lowe said.
“The future path of that recovery is highly dependent on containment of the virus.
“High or rising infection rates have seen a recent loss of growth momentum in some economies.”
