Deloitte: More virus equals less GDP

Via Deloitte:

The release of national accounts data this morning confirms the Australian economy has just experienced its sharpest ever three-month contraction – driving it to its weakest growth since the end of World War 2.

Australian GDP growth over the same quarter of the previous year

Source: Australian Bureau of Statistics.  Note quarterly numbers have only been available since 1959.

But perspective is handy.  As the chart below shows, only a handful of nations have seen less damage to their economies amid the coronavirus crisis.  The chart below shows that China, Vietnam, Taiwan and South Korea have all done better than we have on the economy – mainly as they’ve also done better than us at keeping the virus contained.

GDP growth rates over the same quarter of the previous year – international comparison

Source: Australian Bureau of Statistics, US Bureau of Economic Analysis, Eurostat, Statistics Bureau of Japan, Statistics Canada, National Bureau of Statistics China, Statistics Korea, Taiwan National Statistics, General Statistics Office of Vietnam.  Note that Statistics New Zealand releases its June quarter GDP estimate on 17 September.

Deloitte Access Economics Senior Economist Sheraan Underwood noted: “The underlying equation is simple. The greater the success against the virus, the greater the success in protecting economies against the pandemic.

The effect on economies is mostly a function of the impact of the virus

Source: Our World In Data.

“At the other end of the scale, the hit to most economies is rather larger than that seen in Australia.

“The defence of Australian lives and livelihoods has seen us thread the needle. Australia has seen both less economic damage and relatively fewer lives lost than most nations, including the US, the UK and most of Europe, including Sweden, which has taken a different path than many others.

“Australia’s fight against the virus hasn’t been perfect, but it has still been much more successful than in most other nations around the world.”

Suck it up, psychos!

Houses and Holes
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  1. How about including government stimulus and remind me of this in 3 months when Oz still has terrible numbers and Sweden and Brazil have huge numbers being post herd immunity.

  2. Have they considered the difference between a front-ended strategy and a slow motion car crash with seemingly no end in sight? It isn’t a footy scoreboard that will always be a correct score of the game at any point in time.

    A test cricket match must blow their mind.

  3. How on earth are you drawing that conclusion?

    European union, canada and Japan had fewer deaths per million, but their economies contracted more?

    What you are finding is that the economies that depend on trade/exports/manufacturing fared well

    While those dependent on services/tourism fared poorly

    I don’t think it takes a genius to work out why

    Also, south korea and taiwan had very moderate lockdowns relative to the european union and USA, which is undoubtedly also why they didn’t contract as much

    It seems no one at macrobusiness really understands how statistics and causality actually works

    • well add Deloitte to that as well.

      agree that we can’t really make any comparatives just yet as everywhere is at different stages. NSW hasn’t been able to rub out the virus and it seems to be really taking hold in Sydney – hotspots are getting closer and to be honest I’d like the State to lock down to try to bring it closer to elimination. That said, I can work from home so of course I would say that …