1016.0 - The Australian Statistician's analytical series, 2020  
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Droughts, fires, cyclones, hailstorms and a pandemic – the March quarter 2020


Author area: Macroeconomic Statistics Division1


1.1 Measuring the economy through extreme events

The March quarter of 2020 will be remembered for a succession of extreme events in Australia. Drought, severe bushfires, cyclones, hail storms and the outbreak of a global pandemic dominated the first quarter of the new decade.

Cumulatively, the extraordinary conditions that shaped the March quarter disrupted almost every aspect of Australian society and the economy. Measuring the impact of these events was critically important to give the Australian people, businesses and government an accurate evidence base to make informed decisions.

As Australia’s national statistical organisation, the ABS plays a leading role in measuring an economy under unprecedented pressure.

A dual approach was taken. To complement its regular economic publications, the ABS introduced a series of near real-time, quick turnaround surveys to provide more up-to-date information in the fast-changing economic and social environment.

While these 'rapid response' surveys helped meet the immediate demand for timely information, the range of regular ABS statistical publications continued to provide the benchmarks for measurement of the Australian economy.

This article brings together data from key ABS economic statistical releases such as the National and International Accounts, the Labour Force Survey, price indexes and government finance statistics to create a comprehensive record of how the Australian economy weathered the events of the March quarter. This crucial baseline data will provide the foundation for future comparisons and analysis, as the impacts of COVID-19 continue to unfold in subsequent quarters.


1.2 Overview of March quarter 2020 events and economic impacts

As 2019 drew to a close, the Australian economy continued its record stretch of continuous growth with high labour force participation and low unemployment. However, weaker revenue forecasts led the government to reduce the predicted 2019/20 surplus from $7.1 billion to $5 billion in the December Mid-Year Economic and Fiscal Outlook (MYEFO). Announcing this reduction, the Treasurer noted that the "...devastating drought has already taken a quarter of a percentage point off GDP growth and reduced farm output by a significant amount over the last two years."

The drought certainly took a significant toll in the lead-up to 2020. Drier than normal conditions affected large areas of New South Wales and Queensland from 2017. By August 2018, all of NSW and large parts of Queensland were drought declared. By the year’s end, the Bureau of Meteorology declared 2019 Australia's warmest and driest year on record.

While the initial effects of the bushfires were noted by the time of MYEFO, worse was yet to come. At the close of 2019, the dry conditions of previous years, coupled with build-ups of fuel and summer weather systems saw fire danger rated as catastrophic in many areas for the first time since such ratings began. By early January 2020, fires were burning across the country. In New South Wales, 2019/20 was the most devastating bushfire season in the state’s history. By 31 March, the end of the NSW bushfire season, more than 5.5 million hectares had been burned, more than 2,000 houses destroyed and 25 lives lost in NSW alone.

Smoke from the bushfires blanketed Australia’s south-east for many months with substantial adverse ecological, economic and social effects, including on public health.

On 19 January, in Victoria relief from fire conditions took the form of an intense hail-storm in Melbourne, which brought destructive winds and heavy rain to a wider area. That evening, a major dust storm enveloped western NSW, leaving towns temporarily in a new dust-filled darkness yet bringing little rain to areas around Nyngan, Parkes and Dubbo.

Severe thunderstorms and hail hit the eastern states again on 20 January pounding Sydney and Canberra, with storm damage and loss of power spreading as far north as South-East Queensland.

On the afternoon of 8 February, Tropical Cyclone Damien made landfall on the coast near Karratha, WA. Sustained gales and heavy rain accompanied the cyclone, causing extensive damage in the Pilbara region. Cyclone Esther followed but was less intense, dissipating into a low-pressure system which meandered across the NT and Kimberley region, bringing much needed rain to many areas.

In late January Australia started to record a small but steady stream of COVID-19 cases. New cases climbed from 2 March before peaking on 28 March.

Travel bans, which came into force progressively from 1 February, and social distancing restrictions, which were implemented in two phases on 23 and 26 March, saw the number of new cases begin to fall as the quarter ended.

As the impacts of COVID-19 were felt across the globe, the Government announced stimulus packages including the JobKeeper package, on 30 March.

Figure 1: A timeline of events in the March quarter, 2020
Figure 1 shows A timeline of events in the March quarter, 2020
Sources: https://www.covid19data.com.au/states-and-territories
https://www.health.gov.au/news/health-alerts/novel-coronavirus-2019-ncov-health-alert/coronavirus-covid-19-current-situation-and-case-numbers
https://earthdata.nasa.gov/faq/firms-faq#ed-viirs-375m-product

The challenging conditions of the March quarter caused households, businesses and the government to respond in a variety of ways. These responses were seen in the economic statistics produced by the ABS. This article brings together the key economic statistics stories of the March quarter 2020 and the ABS will publish a similar overview after the release of the June quarter 2020 national accounts.

Overall, Australian Gross Domestic Product (GDP) fell 0.3% in seasonally adjusted, chain volume terms in the March quarter 2020 and growth slowed to 1.4% through the year. This was the slowest through-the-year growth since September 2009 when Australia was in the midst of the Global Financial Crisis. However, this figure captured only the start of the expected economic effects of COVID-19, which will continue to be captured throughout the June quarter.

Figure 2: GDP growth rates, chain volume measures: seasonally adjusted
Figure 2 shows GDP growth rates, chain volume measures: seasonally adjusted
Source: 5206.0 - Australian National Accounts: National Income, Expenditure and Product, Mar 2020

The key contributions to GDP growth were from net exports and general government consumption. This article looks at these (see Section 4.1 and 5.1) plus household consumption (Section 2.4).

Figure 3: Contribution to GDP growth, seasonally adjusted
Figure 3 shows Contribution to GDP growth, seasonally adjusted
Source: 5206.0 - Australian National Accounts: National Income, Expenditure and Product, Mar 2020


Footnote

1 This article presents the work of a large number of teams across the ABS. Kristen Stone was the lead author, with key contributions from: Michael Abbondante, Marko Barosevic, Cheng Chen, Meg Dixon-Child, Ben Dorber, Rebecca Eales, Michael Gerrity, Jennifer Humphrys, Jacqui Jones, Katherine Keenan, Kayla McIntosh, Robert na Champassak, Kimberley Seats and Andrew Tomadini.