Australia’s economy rebounds sharply in third-quarter from COVID-19 recession

Australia’s economy rebounded sharply in the third quarter from a coronavirus-induced recession as consumer spending surged though the country’s top central banker signalled monetary policy will stay accommodative for a while. Data out earlier showed the A$2 trillion ($1.5 trillion) economy expanded by a bigger than expected 3.3% in the September quarter, following a 7% contraction in June, as the country largely got COVID-19 under control.

The rebound was led by household spending, which rose 7.9%, driven by massive fiscal and monetary stimulus since March. The Australian dollar briefly hit a day’s high of $0.7389. Economic growth is expected to be “solidly positive” in the December quarter as well, Reserve Bank of Australia (RBA) Governor Philip Lowe said, underscoring the country’s success in curbing the pandemic.

The optimism is underlined by card spending data by the country’s biggest banks which showed consumers splurged in the last week of November during Black Friday and Cyber Monday sales. Top lender Commonwealth Bank reported a 12% jump in spending on cards for the week-ending Nov. 23 from last year while ANZ saw a 28% surge. Australia is not yet out of the woods, as escalating tensions with top trading partner China hang heavily on the outlook.

Despite the brisk pace of quarterly growth, economic output is still down 3.8% over the year after Australia entered its first recession in three decades in the first half of 2020 due to coronavirus-driven lockdowns.

Australia’s economy rebounds sharply in third-quarter from COVID-19 recession, Reuters, Dec 2