By Swati Pandey
SYDNEY (Reuters) – Australian retail sales suffered a historic plunge in April when much of the country was locked down to combat the coronavirus, as markets and policymakers braced for the nation’s worst ever economic contraction in the current quarter.
Retail sales slumped a seasonally adjusted 17.7% in April, their biggest on record, from an 8.5% jump in March, data from the Australian Bureau of Statistics (ABS) showed on Thursday.
“There were record falls in cafes, restaurants and takeaway food services (-35.4%), and clothing, footwear and personal accessory retailing (-53.6%), as well as a large fall in department stores (-14.9%),” the ABS said.
Australia implemented strict social distancing rules in mid-March to contain the COVID-19 pandemic, forcing many businesses to close. Though some restrictions have eased this month economists say it will be a while before activity returns to pre-crisis levels.
Analysts are predicting Australia’s gross domestic product (GDP) could fall roughly 8% in the current quarter, with the dive in April retail sales alone subtracting 2.1 percentage point off GDP.
That would leave the economy facing its first recession in nearly three decades following the 0.3% contraction last quarter.
To blunt the hit, Australia’s central bank has slashed interest rates to a record low 0.25% and launched an unlimited quantitative easing programme while the federal government has stepped in with a large fiscal support plan too.
Those stimulus measures seem to be working with recent data pointing to a pick up in activity.
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Separately, ANZ Bank said spending on its debit and credit cards was drifting up. In the week to May 27, total ANZ-observed spending was up 3.3% from a year ago, including retail spending growth of 25%.
(Reporting by Swati Pandey; Editing by Muralikumar Anantharaman & Shri Navaratnam)
