Economic downturn in an historical context

Released
2/09/2020

The COVID-19 pandemic has had an unprecedented impact on the global economy and Australia was not immune from its effects. The Australian economy fell 7.0% in the June quarter 2020, the largest fall in Gross Domestic Product (GDP) since quarterly measurement began in 1959. June quarter 1974 previously held the record fall of 2.0%.

Figure 1 - Quarterly growth in Gross Domestic Product, seasonally adjusted chain volume measures

Quarterly growth in Gross Domestic Product, seasonally adjusted chain volume measures

Figure 1 - Quarterly growth in Gross Domestic Product, seasonally adjusted chain volume measures

This image uses a column graph to plot real Gross Domestic Product from June 1960 to June 2020. Additionally, vertical grey bars represent those quarters affected by falling real GDP during this time and which include:

December 1960
June 1961
September 1961
June 1963
March 1964
September 1965
March 1966
June 1967
March 1968
March 1969
September 1970
December 1971
March 1972
September 1972
June 1974
September 1975
December 1975
March 1977
September 1977
December 1977
June 1979
December 1981
March 1982
September 1982
December 1982
March 1983
June 1983
December 1985
June 1986
December 1989
September 1990
March 1991
June 1991
December 2000
December 2008
March 2011
March 2020
June 2020

Graph and data - quarterly growth in Gross Domestic Product

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Associated with the economic downturn were record falls across many key national accounts aggregates, including hours worked and compensation of employees.

Figure 2 - National accounts hours worked and compensation of employees, seasonally adjusted

National accounts hours worked and compensation of employees

Figure 2 - National accounts hours worked and compensation of employees, seasonally adjusted

This image uses a combined column and line graph to plot the impact of hours worked and compensation to employees on GDP from December 1978 to June 2020. Additionally, vertical grey bars represent those quarters affected by falling real GDP during this time and which include:

June 1979
December 1981
March 1982
September 1982
December 1982
March 1983
June 1983
December 1985
June 1986
December 1989
September 1990
March 1991
June 1991
December 2000
December 2008
March 2011
March 2020
June 2020

Graph and data - national accounts hours worked and compensation of employees

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The fall in hours worked of 9.8% was unprecedented. The fall in Compensation of employees (-2.5%), although a record fall, was less pronounced due to the JobKeeper program. $31.0 billion in payments were made via the JobKeeper program this quarter, an amount that exceeds the cumulative sum of all previous employment subsidies.

The fall in the June quarter was driven by Private demand, which detracted 7.9 percentage points from GDP. The record fall in household consumption (-12.1%), accounted for over 95% of the fall in GDP.

Figure 3 - Public and private demand contributions to quarterly growth in GDP, seasonally adjusted chain volume measures

Public and private demand contributions to quarterly growth in GDP, seasonally adjusted chain volume measures

Figure 3 - Public and private demand contributions to quarterly growth in GDP, seasonally adjusted chain volume measures

This image uses a stacked column graph to plot the impact of public demand, private demand and net exports on GDP from September 1998 to June 2020. Additionally, vertical grey bars represent those quarters affected by falling real GDP during this time and which include:

December 2000
March 2011
March 2020
June 2020

Graph and data - public and private demand contributions to quarterly growth in GDP

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This record fall in household consumption coupled with government support payments to households drove a rise in the household income to saving ratio to 19.8%, the highest since June 1974.

Figure 4 - Household saving, seasonally adjusted

Household saving

Figure 4 - Household saving, seasonally adjusted

This image uses a combined column and line graph to plot the impact of household saving and the volume of household final consumption expenditure on GDP from June 1960 to June 2020. Additionally, vertical grey bars represent those quarters affected by falling real GDP during this time and which include:


December 1960
June 1961
September 1961
June 1963
March 1964
September 1965
March 1966
June 1967
March 1968
March 1969
September 1970
December 1971
March 1972
September 1972
June 1974
September 1975
December 1975
March 1977
September 1977
December 1977
June 1979
December 1981
March 1982
September 1982
December 1982
March 1983
June 1983
December 1985
June 1986
December 1989
September 1990
March 1991
June 1991
December 2000
December 2008
March 2011
March 2020
June 2020

Graph and data - household saving

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All levels of government responded to the COVID-19 pandemic with support payments that assisted businesses to carry out economic activity, the largest of which were the JobKeeper and Boosting Cash Flow for Employers policies. These support payments rose to record levels, reaching $55.5 billion in the June quarter. Social assistance benefits in cash increased $14.4 billion, reflecting additional COVID-19 support payments. As a result of increased support, General Government net saving was -$82.6 billion, the largest negative outcome on record.