Treasurer Josh Frydenberg has confirmed Australia is in recession, after the economy went backwards in the three months to March with worse expected for June.
It is the first recession in almost 30 years, since 1990.
The ACT's economy was the nation's strongest in March, bucking the trend to grow 2.2 per cent in the quarter. The economies of Western Australia and Tasmania also grew but by far less (0.9 per cent, and 0.6 per cent).
Nationally, the economy fell 0.3 per cent to the end of March, Australian Bureau of Statistics national accounts data confirmed on Wednesday. A recession is defined as two quarters of negative growth, and with the worst of the coronavirus downturn not hitting till the end of March, the June quarter is expected to slide further.
Mr Frydenberg greeted the figures as good news, saying it showed the economy was remarkably resilient. He compared the 0.3 per cent fall with much bigger falls overseas - 9.8 per cent in China, 2 per cent in Britain and 1.3 per cent in the United States.
"Today's national accounts show, once again, that in the face of a one-in-100-year global pandemic, the Australian economy has been remarkably resilient," he said.
"We were on the edge of the cliff. What we were facing was an economist's version of Armageddon. We have avoided the economic fate, and the health fate, of other nations."
Mr Frydenberg has delayed his detailed budget update to July, when changes to the JobKeeper wage subsidy will also be announced. The wage subsidy has been troubled by anomalies, excluding a number of workers and also skewing competition between businesses which get a substantial part of their wages bill paid by the government and businesses that don't qualify at all. It is also covering many fewer workers than expected. The subsidy might be targeted at some industries or reduced for some workers.
Mr Frydenberg said the outcomes of the review would be announced at the same time as the budget update.
The downturn in March was only the fourth negative quarter in 29 years of economic growth, Mr Frydenberg said.
"While fear of a lockdown saw panic-buying of food and household items, total consumption still fell by 1.1 per cent in the quarter. This is the largest quarterly decline in consumption in 34 years."
Bureau of Statistics chief economist Bruce Hockman said annual growth slowed to 1.4 per cent, the slowest since the global financial crisis.
Even during the global financial crisis, Australia stayed out of recession, but the coronavirus downturn has already been widely acknowledged as much worse.
Unemployment would rise to about 10 per cent in the June quarter, a faster rise than in the Great Depression, Treasury Secretary Steven Kennedy has predicted.
"We have never seen an economic shock of this speed, magnitude and shape," he said at the end of April.
Mr Kennedy has also predicted that Australia will avoid a typical depression where economies take years to recover. Depressions usually involved a long-drawn-out period of very high unemployment, very low growth and dysfunctional credit markets, he said in May.
In this case, if businesses could be supported through the worst, they could be positioned to recover more quickly, he said.
He cited spending on housing and business investment as the key signals of recovery and the sectors Treasury would be watching most closely. Since then, Prime Minister Scott Morrison has foreshadowed another stimulus package designed to buoy the housing market and avoid a collapse in construction activity. Cash grants for new builds and renovations are expected to be announced this week.
Mr Hockman said the March result was affected also by the bushfires and other natural disasters.
Spending on services fell significantly, especially on air travel, hotels, cafes and restaurants, and recreation and entertainment. But people spent more on goods, especially food and medicines, as people stockpiled when the coronavirus struck.
The ratio of savings to income actually rose in the three months to the end of March, with disposable income boosted by a 6.2 per cent increase in unemployment and assistance benefits - because of more people receiving them and higher payments, for bushfires as well as the coronavirus.
In the ACT, 2.1 per cent increase in state final demand was driven by government spending - a 4.5 per cent increase in federal spending on bushfire and coronavirus responses, and a 5 per cent increase in ACT government spending on transport and bushfires.
But it wasn't only government spending. While household spending fell in every other jurisdiction in the three months to March, it actually rose 0.5 per cent in Canberra, driven by a 53.4 per cent increase in car purchases following the January hailstorm, and a 4.8 increase in food spending as people rushed to stock up.
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