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 months 3 weeks ago

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

2 months 3 weeks ago

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

4 months 4 weeks ago

ASIC has suspended the Australian Financial Services Licence of a Melbourne-based financial advice firm....

1 week 5 days ago

The corporate regulator has issued infringement notices to three AFSLs whose financial advisers provided personal advice to a retail client while unregistered....

2 weeks 3 days ago

ASIC has released the results of its first adviser exam to be held in 2025, with 241 candidates attempting the test....

3 weeks 1 day ago

TOP PERFORMING FUNDS

ACS FIXED INT - AUSTRALIA/GLOBAL BOND