Australia has suffered its deepest economic contraction since the 1930s with new figures showing GDP collapsing by 7 per cent through the June quarter.
The Australian Bureau of Statistics on Wednesday confirmed the nation's first recession since 1990-1991 with the economy shrinking by 6.3 per cent over the past 12 months.
Australia is now officially in recession.Credit:Bloomberg
Australia's previous worst quarterly result was 2 per cent in June 1974 during the first global oil shock.
Australia's worst annual result occurred in 1930, during the depths of the Great Depression, when the economy shrank by an estimated 10 per cent. The economy is estimated to have contracted by 5 per cent in the wake of World War II as military production ended.
The result was driven by a collapse in household consumption which fell by 12.7 per cent in quarter.
Discretionary spending dropped by 25 per cent while spending on services fell by 17.6 per cent. The biggest hit was to transport spending which fell by 85.9 per cent while households slashed spending on hotels, cafes and restaurants by 56.1 per cent.
Private capital expenditure tumbled by 6.9 per cent although it was partially held up by the mining sector.
The bureau's head of national accounts, Michael Smedes, said private demand stripped 7.9 percentage points from GDP
"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," he said.
"Net trade added one percentage point to growth while public demand, driven by health-related spending by state and local government, added 0.6 percentage points. A drop in inventories took 0.6 percentage points off the quarterly result."
The household savings ratio rose to 19.8 per cent, its highest level since 1974.
GDP per capita fell by 7.4 per cent after a drop in the March quarter. The previous record fall in GDP per capita of 2.4 per cent occurred in the June quarter of 1974.
Profit share went through 30 per cent, largely due to the accounting of JobKeeper and other support programs which went directly to businesses.
The results compare favourably with other nations which have already reported their June quarter national accounts.
Britain's economy contracted by 20.4 per cent, America's by 31.7 per cent, Germany's by 9.7 per cent while Canada's shrank by 11.5 per cent.
Among the states, the biggest hit through the quarter was taken by NSW.
NSW state final demand, which excludes imports and exports, fell by 8.6 per cent while it was down by 8.5 per cent in Victoria. Every state and territory went backwards with the ACT least affected where it dropped by 2.2 per cent.
The nation's economists had tipped a contraction in the quarter of between 5 per cent, forecast by NAB, and 7.2 per cent, which JPMorgan had predicted.
Ahead of the figures, shadow treasurer Jim Chalmers said the nation was facing a crisis but the government was yet to outline its plan to rebuild the economy.
"This Morrison-Frydenberg recession is deep and it's devastating for millions of Australians and their families. We're in the teeth now of a full blown jobs crisis but the Morrison Government still doesn't have a jobs plan to respond to it," he said.
Finance Minister Mathias Cormann said on Wednesday morning the past few months since pandemic began had "been a terrible period".
"The global coronavirus pandemic has had a very heavy impact on economies all around the world including, of course, here in Australia," Senator Cormann said.
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