It was a staggering turnaround for an economy that – at last check – had just contracted a whopping 7 per cent as state governments sought to control rising case numbers with lockdown measures that effectively froze activity. The 3.3 per cent increase in GDP was the largest quarterly growth since 1976, well above the expectations of many economists – and while Mr Frydenberg is clear-eyed about the realities of the recession, he believes that Australia is on a pathway to strong growth.
“The trend is our friend here,” Mr Frydenberg told media.
“Today’s national account numbers are not an isolated event. It’s the cumulation of significant government support, it’s a reflection of the virus being suppressed across the nation, and you’re seeing business confidence and consumer confidence coming back.”
Mr Frydenberg pointed to other positive economic data – including rising house prices and building approvals, as well as strong jobs growth – as evidence that the recovery was well underway, while acknowledging that the recession had caused significant damage to many households.
“This is a very challenging time and there is a lot of ground to make up….The recession is over but the recovery is not. There are a lot of Australian families that will be in a pretty tough financial situation and a number of Australians are still out of work,” Mr Frydenberg said, adding that the Morrison government was doing “everything possible” to get employment back to pre-COVID levels.
The recovery is also likely to be supported by a vaccine, which has gone from a pandemic pipe dream to reality in the last few weeks as Moderna, Pfizer, and a number of other companies look to bring their products to market.
“A vaccine should once and for all put the COVID crisis behind us, and households appear well placed to keep spending given their still high saving rate. We’re also likely to see a boom in domestic tourism and a further recovery in housing activity in anticipation of an eventual recovery in immigration,” said BetaShares chief economist David Bassanese.
