Australia’s recession likely already over: BetaShares

BetaShares David Bassanese RBA recession covid-19 coronavirus

4 June 2020
| By Jassmyn |
image
image
expand image

The Government’s social distancing measures have likely caused the sharpest and the shortest economic contraction in history, just spanning March and April, according to Betashares.

Betashares’ chief economist, David Bassanese, said the extent to which a recession was defined as a period of economic contraction, “the good news is that Australia’s recession is likely already over”.

“That said, to the extent recession is defined as a period of subpar economic growth and persistent very high unemployment, then challenging times will likely persist for at least another six months to one year,” he said.

“While we may see a short-term bounce in economic activity from depression conditions as social distancing restrictions ease, the ongoing risk of second waves likely mean global business and consumer spending settle back to a quite subdued pace over the following months thereafter.”

Bassanese noted that the economy was already struggling before the COVID-19 pandemic as a result in a downturn in housing construction, weak business investment, and tapped out consumer spending. The pandemic, he said, had only exacerbated the issues.

“While the RBA may still be tempted to flirt with negative interest rates if the Australian dollar strengthens further, its perhaps better off pleading with other central banks not to pursue this zero sum game of competitive currency depreciation,” he said.

“It’s not helpful to the banking sector and risks further inflating a dangerous bubble in equity market valuations.”

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

So we are now underwriting criminal scams?...

2 weeks 6 days ago

Glad to see the back of you Steve. You made financial more expensive, not more affordable as you claim, and presided ...

3 weeks 3 days ago

Completely agree Peter. The definition of 'significant change is circumstances relevant to the scope of the advice' is s...

2 months 3 weeks ago

ASIC has taken action against a Queensland adviser who was sentenced last May for misappropriating $1.8 million from his clients....

2 weeks 2 days ago

AMP is to launch a digital advice service to provide retirement advice to members of its AMP Super Fund, in partnership with Bravura Solutions. ...

2 weeks 2 days ago

A former Insignia Financial C-suite exec has taken on a leadership role at MUFG Retirement Solutions as it announces chief executive Dee McGrath will depart after six yea...

2 weeks 3 days ago

TOP PERFORMING FUNDS