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

    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

      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

        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

          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.