CANBERRA, AAP – The Australian economy has enjoyed its strongest performance in history over the past six months as it recovers from last year’s recession.
Treasurer Josh Frydenberg said the December quarter national accounts confirmed that a strong, broad-based recovery was under way.
The economy grew by 3.1 per cent in the final three months of 2020, much stronger than 2.5 per cent expected by economists, and followed an upwardly revised 3.4 per cent in the September quarter.
“This is a very encouraging performance from the Australian economy, given the economic abyss that we were staring into at the peak of this crisis,” Mr Frydenberg told reporters in Canberra on Wednesday.
The June quarter of last year had seen economic activity plunge by seven per cent due to the impact of the COVID-19 pandemic.
The Australian Bureau of Statistics said this was the first time in the more than 60-year history of the national accounts data that gross domestic product had grown by more than three per cent in two consecutive quarters.
However, the impact of the downturn lingers on, with the annual rate remaining in negative territory at 1.1 per cent, although this was better than both the Reserve Bank of Australia and Treasury had previously predicted.
Shadow treasurer Jim Chalmers said the growth numbers were not good enough to recover all the ground that was lost in the recession.
“The economy is stronger, but not strong enough to create enough good, secure, well-paid jobs for more Australians,” he told reporters in Sydney.
“The treasurer’s smug, self-satisfied sloganeering fails to mention that there are still two million Australians who can’t find a job or can’t find the hours that they need to support their loved ones.”
Consumer spending, as COVID-19 restrictions eased, was a key driver of the strong result, particularly in Victoria after it emerged from a lengthy lockdown.
Private investment also made a solid contribution through both housing and business investment, which coincided with federal government initiatives, such as HomeBuilder and the expanded instant asset write-off, the ABS said.
At the same time, favourable weather conditions supported a strong increase in agricultural production.
Importantly, Deloitte principal economist Doug Ross said the strength of iron ore prices and low interest rates has seen national income rebound 2.1 per cent above pre-pandemic levels, a “gobsmacking” recovery to date.
“The good news is that Australia’s living standards are linked to our real national income,” Mr Ross said.
But Mr Frydenberg conceded there would still be challenges ahead.
“The job is not done. But you wouldn’t want to be in any other country but Australia as we begin 2021,” he said.
“What is particularly pleasing in today’s numbers is that as our emergency support is tapering off, the private sector is stepping up,” the treasurer said.
More up-to-date data shows the construction industry is one area where the economy is strengthening further.
The Australian Industry Group/Housing Industry Association performance of construction index showed all four sectors it covers recovered strongly in February, with housing activity surging to a record high.
Apartment building also turned positive for the first time in three years.
While the overall index did ease 0.2 points to 57.4 in February, a reading above 50 indicates the sector is expanding.
Ai Group head of policy Peter Burns said employment and activity levels both built on the gains in recent months.
The latest payroll job figures from the ABS showed 85 per cent of positions lost in the first month of the pandemic had been regained as of mid-February.