Lockdowns cause Aussie economy to shrink by 1.9% in Q3

SYDNEY – Lockdowns and border controls shrank Australia’s economy by 1.9% in the third quarter (Q3), official statistics showed today – a more modest than expected decline, but worse compared to many other wealthy nations.

The Australian Bureau of Statistics said the quarterly downturn – the first since it contracted at the start of the pandemic in the first half of last year – was due to “extended lockdowns” in the country’s most populous states.

The downturn was out of step with other major economies such as Canada, India, Japan, and the United States – which all saw growth in the same period.

Sydney, Melbourne, and Canberra were all locked down for chunks of the quarter, causing households to spend dramatically less on services. 

There was a 21% drop in spending on hotels, cafes, and restaurants, and a 40% drop in spending on transport.

Economists had forecast growth would drop around 2.8%, but increased exports appear to have come to the rescue – buoyed by high coal and gas prices.

The economy is expected to bounce back in Q4, but today’s figures will further raise local concern about the impact of the Omicron variant.

Moody’s Investor Service said the strain “poses new risks to the global economic growth and inflation outlook”.

Australia is among the countries that have tightened travel restrictions as a result of the strain.

Moreover, 87% of Australians aged above 16 have been fully vaccinated. – AFP, December 1, 2021