Figures from the June quarter have revealed a 7 per cent reduction in gross domestic product in June, following a 0.3 of a percentage point decline in March.
The 7 per cent quarterly GDP contraction is the largest fall since records began in 1959, and is more than three times worse than the previous biggest fall of 2 per cent in 1974.
Private demand detracted by 7.9 percentage points from GDP, driven by a 12.1 per cent fall in household final consumption expenditure.
Spending on services fell by 17.6 per cent, with falls in transport services, operation of vehicles and hotels, cafés and restaurants.
“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,” head of national accounts at the Australian Bureau of Statistics Michael Smedes said.
Treasurer Josh Frydenberg spoke of devastating numbers that Australians are now facing due to the COVID-19 pandemic.
“Our record run of 28 years of economic growth has officially come to an end, the cause, a once-in-a-lifetime pandemic,” Mr Frydenberg said.
“Behind these numbers are heartbreaking stories of hardship for everyday Australians as they go about their lives.”
Looking forward, Mr Frydenberg pointed to Victoria’s second lockdown hurting growth in the third quarter but was optimistic about Australia’s recovery.
Mr Frydenberg noted consumer confidence has recovered about 70 per cent of the way prior to the pandemic starting, while also highlighting business confidence has also improved since halts to work.
“But there is hope and a road out,” Mr Frydenberg said.
“The road ahead will be long. The road ahead will be hard. The road ahead will be bumpy.”
The announcement follows the Morrison government extending JobKeeper until March next year due to the prolonged downturn caused by the pandemic.
Legislation passed on Tuesday confirmed that the scheme would run to 28 March 2021, with the current $1,500 per fortnight rate set to split into a new two-tier payment rate from 28 September 2020.