Economic figures over the next few days will give a better idea of how deep Australia’s first recession in nearly 30 years has been.
Prime Minister Scott Morrison has warned that Australia faces a “substantial and heartbreaking” economic contraction because of the coronavirus pandemic.
Economists put the decline in the June quarter at somewhere between six and seven per cent, following on from the 0.3 per cent contraction in the first three months of the year.
Two consecutive negative quarters constitutes a technical recession.
The June quarter national accounts are due on September 2.
Before then, and feeding into the final economic growth result, June quarter construction work done is released on Wednesday.
Economists believe it will show a decline of 5.8 per cent after a one per cent fall in the previous quarter.
On Thursday, business investment data will be released.
Economists expect June quarter private business capital expenditure tumbled a hefty 7.9 per cent, extending the 1.6 per cent fall in the first three months of the year.
The upcoming company profits result is unlikely to be pretty given outcomes in the current half yearly reporting season.
Commonwealth Securities chief economist Craig James calculates only 75 per cent of companies have reported statutory profits for the year to June.
“It is the weakest outcome over the decade that we have been tracking interim and final reports,” Mr James says.
“Aggregate full-year earnings have fallen by 37 per cent.”
But the pain doesn’t end there, with economists worried that the harsh COVID-19 restrictions will extend the agony for another quarter.
Commonwealth Bank economists expect the economy will shrink by a further 0.7 per cent in the September quarter, before finally growing by 1.2 per cent in the December quarter.
“The economic recovery has stalled at the national level due to the situation in Victoria,” the bank’s economists say.
That’s because the state accounts for around a quarter of national output.
Bill Evans, chief economist at Westpac, predicts the September quarter could now be flat as a result of the stage four lockdown in parts of Victoria.
He expects the economy will rebound by 2.8 per cent in the December quarter, but that assumes Victoria moves through stage four to stage two restrictions and the other states avoid second wave outbreaks.