Recession ends, but region still needs to recover

AUSTRALIA has emerged from the recession thanks to unexpected growth, but outgoing G21 chief executive officer Elaine Carbines has warned the Geelong region’s economy is not back to normal yet.

The national accounts released in September showed Australia’s economy had experienced two consecutive quarters of negative growth and was thus in recession, but last week’s figures showed real GDP had increased by 3.3 per cent between July and September – the largest quarterly increase since 1976 and exceeding market expectations.

Ms Carbines said the recession ending was very positive news.

“It gives us optimism that our economy will rebound more quickly than perhaps was first thought, when the prediction was that we were entering a recession.

“It’s quite unusual to come out of a recession so quickly.”

She said the imposition of coronavirus restrictions by the state and federal governments – including restrictions on movement – drove the recession and the lifting of those same restrictions helped drive Australia out of it.

“It was an artificially imposed recession, I suppose; it wasn’t caused in a major downturn in any sector of the economy as such.

“It also shows the huge importance of JobKeeper, which has really helped keep the country going since it was started earlier this year.

“It will be very interesting to see what happens when JobKeeper is no longer available, and I certainly want to have a look at the economic figures then, and we may very well see quite an increase in the unemployment figures.

“(JobKeeper) has really artificially inflated the employment figures during the pandemic, so we need to see what effect its cessation will have.”

She said there was no guarantee that people now on JobKeeper would keep their jobs when it was removed, and a spike in unemployment would be a drag on the economy.

Victoria is now in COVIDSafe Summer restrictions, and Ms Carbines hoped for a “bumper summer” for the businesses that had survived.

“Australians are staying home this summer, they’re holidaying at home – but let’s not forget many businesses have not survived and have not come out of the pandemic,” she said.

“There’s still a lot of people unemployed. Everyone knows someone who’s lost a job or have been stood down, and we’re not at full capacity again yet.

“So we can’t be patting ourselves on the back too much; let’s see how it goes over the next quarter.”

She said the Geelong region’s economy was particularly dependent on international students and travellers, and “none of that’s happening”.

“Yes, we can travel at home, and many Australians will be, but we haven’t got our international students back, and they’re a mainstay of tertiary education.”

Federal Treasurer Josh Frydenberg said the national accounts showed every state saw strong growth in the quarter, except for Victoria where it contracted.

“If Victoria had grown in line with the rest of the nation, national growth in the September quarter would have been 5 per cent, not 3.3 per cent.

“Technically, Australia’s recession may be over but Australia’s economic recovery is not.

“There is a lot of ground to make up and many Australian households and many Australian businesses are doing it tough – very tough.”