SYDNEY: Australia’s economy may have shrunk slightly in the three months through June, setting up the bad “optics” of a technical recession when combined with the lockdown-induced contraction expected for the current quarter, according to Citigroup and AMP Capital Investors.
While the economy performed pretty well in the second quarter, a fall in net exports is likely to be among factors that drag gross domestic product (GDP) negative, Citi’s Josh Williamson and AMP’s Shane Oliver said ahead of Wednesday’s release. The range of GDP estimates in Bloomberg’s survey runs from the -0.1 per cent forecast by the pair up to more than +1 per cent, an unusually wide divergence, report agencies.
Sydney is now in its 10th week of lockdown and Melbourne and national capital Canberra are also under stay-at-home orders as authorities struggle to contain an outbreak of the Delta variant of coronavirus.
A second-quarter slump would be a surprise, as the more likely avenue for recession was expected to be shutdowns extending into the fourth quarter for a negative second half of 2021.
Australia posted consecutive quarterly GDP contractions in the first half of 2020 as Covid swept the global economy, ending an almost three-decade stretch without a technical recession.