Australia: Doubled-dip recession avoided in Q2 – UOB

Economist at UOB Group Lee Sue Ann comments on the latest GDP results in Australia.

Key Takeaways

“The Australia economy rose 0.7% q/q in the second quarter, higher than expectations for a 0.4% q/q reading, but a slower pace of growth than the previous quarter (when it rose a revised 1.9% q/q). From a year earlier, the economy expanded by 9.6% y/y, higher than an estimated 9.1% y/y increase, and a major turnaround from last quarter’s revised reading of 1.3% y/y.”

“Extended lockdowns in Sydney and Melbourne are likely to continue impacting Australia’s economic recovery in the near-term. Sydney has been in a prolonged lockdown since 26 June, with restrictions poised to continue at least until end-September… A significant hit to economic activity is expected in 3Q21, and a reversal of some of the recent gains in the labour market in the near term. That said, the ongoing support, from both the fiscal and monetary front, will likely see a rapid rebound as restrictions are removed. A rapid rebound as well as ongoing strong growth will see the economy catch up over 2022 so that the level of GDP is broadly similar to our previous set of forecasts.”