Analysing by States shows over two-thirds (68%) of Queensland businesses say Australia is now in a ‘recession’ – higher than any other State.
A majority of businesses in New South Wales (56%) and a slight majority in Victoria (51%) also agree that Australia is now in a ‘recession’. Although a small sample, Tasmanian businesses are more likely than those in any of the three larger States to say Australia is in a ‘recession’.
In contrast a slim majority of businesses in both Western Australia (53%) and South Australia (52%) say Australia is ‘not’ in a ‘recession’.
Businesses of all sizes agree – we’re in a ‘recession’
Businesses are in agreement that we’re in a ‘recession’ with 56% of businesses with annual turnover of under $5 million and also over $5 million saying Australia is now in a ‘recession’.
Most Industries agree Australia is in a ‘recession’
Majorities of businesses in Manufacturing, Construction, Wholesale trade, Accommodation & Food services, Information Media & Telecommunications, Finance & Insurance, Property & Business Services, Education & Training, Community Services and Recreation & Personal agree Australia is in a ‘recession’.
Why do businesses say Australia is in a ‘recession’?
Those who say Australia is in a ‘recession’ cite the fact people aren’t spending money in the economy, poor Governmental policies, the drop in confidence, falls in the share-market and the Australian Dollar, and also the high levels of unemployment and under-employment and also the massive drop-offs in tourism and travel as bans on several countries have been introduced as well as a mandatory two week quarantine period for all visitors to Australia…
Roy Morgan Chief Executive Officer Michele Levine says a majority of Australian businesses agree we are in the first ‘recession’ since the early 1990s – and of those that don’t many expect to soon be in a ‘recession’:
“Some industries have been hit harder than others but majorities of businesses in most industries agree Australia is in a ‘recession’ including Manufacturing, Construction, Wholesale trade, Accommodation & Food services and Education & Training.
“Although it’s obvious Australia is already in a ‘recession’ there are only a few things that can save Australia from experience a full-blown ‘depression’ which is recognised as a fall in GDP of at least 10%. The four companies that dominate Australia’s export of iron ore primarily to China led by BHP, Rio Tinto, Fortescue Metals and Gina Rinehart’s Roy Hill can ‘cushion the blow’ to the Australian economy if they can continue to export large quantities iron ore at the current high prices.
“The combination of continued high export earnings bringing dollars into the Australian economy and the benefit of cheap fuel caused by the oil price war can soften the impact of the COVID-19 related economic slowdown – helped a lot by the price of petrol dropping significantly!.”
A recession looks ‘baked in’. The question now is how long it will drag on and whether it will turn into an economic depression?
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
