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Economy

Australia breaks 29-year growth streak and falls into recession

Coronavirus restrictions spark record 7% contraction in second quarter

Australia's nearly three-decade run without a recession comes to an end.   © Reuters

SYDNEY -- Long known as "the lucky country," Australia finally saw its fortunes take a turn for the worse as its economy staged its biggest slump on record in the second quarter through June, sending the country into its first recession in 29 years.

Gross national product for the April-June period shrank by 7% on the quarter in real terms, data released Wednesday by the Australian Bureau of Statistics shows. The drop was the largest by percentage since comparable records started being kept in 1959.

The downturn was driven primarily by the restrictions enacted in response to the novel coronavirus. On top of sheltering orders, restaurants and entertainment venues were forced to curtail operations.

Private consumption, which makes up about 60% of the GDP, fell by 12.1% in the second quarter.

Australia's exports of goods and services shrank by 6.7%. The entry ban against foreign travelers implemented in March depressed business at travel service providers and similar operators.

This second-quarter decline follows the 0.3% contraction in the first quarter, putting the country in a technical recession. Australia last recorded two straight quarters of negative growth in the first and second quarters of 1991.

Most economists think a sharp recovery in the third quarter is unlikely. Australia's coronavirus outbreak had hit a lull, but the number of cases shot up again in Melbourne, the second-biggest city, at the end of June. Melbourne's home state of Victoria later reintroduced lockdown measures.

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