Australia always had an incredible economy. It still is. That our GDP fell by 0.3% in the March quarter has not gone unnoticed thus far though.
Discussions are already afoot whether we are already in recession. With the economy likely to shrink further in the June quarter, we are likely to be in pain for some time now. Recession, which is normally defined as two consecutive quarters of contraction or negative growth, is possibly staring at us.
And what measures the government needs to take now. Here, it would be better to understand, that things were not almost perfect even before the pandemic.
Governments were very prompt in containing the virus. But as a side effect, the economy was severely affected by extraordinary and also expensive restrictions
With the ebbing of new cases of the pandemic, the focus has now fully shifted to the revival of our economy. It becomes imperative now to build confidence and momentum and getting the economy back to a more sustainable level.
There were many ongoing programs for an impressive number of people. Prominent among these was The JobKeeper wage subsidy covering 3.5 million workers to keep them on the books. The coronavirus supplement of $550 a fortnight and Wage subsidies for apprentices. Albeit surprising, the expiry date of the programs has been linked to a six month life span rather than a specific need of the program.
Though Government spending on benefits helps in stabilizing the economy, to grow long term, it must ramp up investment and induce spending by people as well.
Governments are already initiating roll back steps. From midnight Monday, June 21, Victoria will enter Stage Two of roll-back measures. Limitations on drinking at pubs and clubs and children's sport are among the restrictions set to be rolled back.
After mid-April there have been some early signs of improvement. Consumer confidence along with the stock market has also seen a rise since then.
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