New data shows Australia on track for recession
The Australian economy went backwards in the three months to the end of March - the first quarter of contraction in nine years.
Official figures released by the Australian Bureau of Statistics this morning showed Gross Domestic Product (GDP) shrank by 0.3 per cent in the March quarter as the coronavirus crisis began to take hold.
That is the first negative result since March 2011.
On average, economists had been expecting a result of -0.4 per cent.
For the 12 months to the end of March, GDP growth was 1.4 per cent, the ABS 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," ABS chief economist Bruce Hockman said today.
The slide means the nation is headed into a recession, with the current quarter sure to be substantially negative.
A recession is defined as two consecutive quarters of economic contraction.
On Tuesday, Reserve Bank of Australia Governor Philip Lowe said the depth of the current decline might be less than first thought.
"The Australian economy is going through a very difficult period and is experiencing the biggest economic contraction since the 1930s," Dr Lowe said.
"Notwithstanding these developments, it is possible that the depth of the downturn will be less than earlier expected.
"The rate of new infections has declined significantly and some restrictions have been eased earlier than was previously thought likely," Dr Lowe said in a statement explaining the RBA's decision to leave its cash rate unchanged at a record low of 0.25 per cent.
"And there are signs that hours worked stabilised in early May, after the earlier very sharp decline. There has also been a pick-up in some forms of consumer spending."