The Australian economy shrank in the three months to September, as coronavirus pandemic-related lockdowns weakened demand but rising vaccination rates offset some of the weakness.
Gross domestic product shrank by 1.9% compared with the previous quarter. Compared with the same period a year ago, the economy managed growth of 3.9%. The contraction followed four consecutive quarterly gross domestic product increases.
While the pandemic continues to stunt growth, sharply higher vaccination rates are offsetting some of the effects.
The emergence of the Omicron strain is a new threat but with 87% of the adult population now double-jabbed the government is determined to keep the economy open.
Other data released on Wednesday showed signs that the country’s economic recovery was gathering pace.
The IHS Markit manufacturing purchasing managers’ index came in at 59.2 earlier in the day, up from the previous month and well above the 50 threshold that separates expansion from contraction.
House prices also rose for the 14th consecutive month in November, according to data released by CoreLogic. The median house price in Australia has increased by A$126,700 over the past 12 months, the data showed.
“We expect GDP to surpass its pre-Delta peak this quarter already and to keep surprising to the upside next year,” Marcel Thieliant, a senior economist at Capital Economics, said. He predicted growth of 5% for 2021.
“With the household savings rate jumping to 19.8%, there’s enormous scope for consumption to recover over the coming quarters,” he added.
- Reuters with additional editing by George Russell