On Wednesday, the Australian Bureau of Statistics (ABS) reported a 7 percent contraction in gross domestic product (GDP) for the April-June period. The decline in economic activity is the biggest for the country since its records began back in 1959. Further, the contraction comes after 0.3 percent negative growth seen in the previous quarter.
Technically, two consecutive quarters of shrinkage in GDP is considered as a recession for an economy.
Back in 2008, during the financial crisis, Australia was the only major economy to avoid a recession, mainly due to demand for its natural resources from China.
At the start of 2020, Australia's economy was hit by extreme bush fire and early stages of the coronavirus pandemic.
Despite measures from its government and central bank, a severe contraction in household spending on goods and services by the shutdown of businesses across the country have taken a toll on its economy.
Historically, Australia had seen steady economic growth due to its strong coal, iron ore and natural gas exports to a surging China. Tourism has also been a big driver of growth.
Closed border and strict social distancing measures to curb the spread of COVID-19 along with its rising tensions with China have had an effect on the country's economy.