Australia headed into its first recession since 1991

Australia is heading for its first recession in nearly three decades after the economy shrunk in the January-March quarter, with a “far more severe” reading expected in the next three months as the effects of the virus shutdown bite.

The 0.3 percent contraction was the first quarterly drop since 2009 during the global financial crisis and came as the lockdown exacerbated the impact of a prolonged drought and massive bushfires.

And while it was smaller than the forecast 0.4 percent drop, Treasurer Josh Frydenberg said Australia — once dubbed the “Lucky Country” by author Donal Horne — was now on track to enter its first recession since 1991 “on the basis of the advice that I have from the Treasury Department about where the June quarter is expected to be.”

“The economic impact will be severe. Far more severe than what we have seen today,” Frydenberg said.

Australian government ordered many businesses shut and closed the country’s international borders to non-Australians to stem the spread of coronavirus, costing the economy billions of dollars but achieving success in containing the transmission.

Frydenberg said the negative March quarter “compared very well” to results in many other countries, showing the Australian economy’s “remarkable resilience.”

“We have avoided the economic fate, and the health fate, of other nations because of the measures that we have taken as a nation.”

The government has effectively bankrolled swathes of the economy — subsidizing wages and urging rent deferrals in order to keep businesses on life support until normal life returns.