Australia faces first economic contraction in a year on Sydney lockdown


By Swati Pandey

SYDNEY (Reuters) – A coronavirus lockdown in Sydney, Australia’s most populous city, threatens to shrink the country’s economy in the third quarter, with a slow vaccine rollout adding to the headwinds.

A drop in gross domestic product (GDP) from the previous quarter would represent the country’s first economic contraction since June 2020, when a nationwide coronavirus lockdown forced businesses to down shutters.

The A$2 trillion ($1.5 trillion) economy is now larger than its pre-pandemic level with solid growth in employment, consumer spending, house prices and building approvals. Australia’s central bank had estimated first half growth at 2.6% year-on-year.

But all that has come under a cloud with more than 5 million Sydneysiders, about a fifth of Australia’s population, under stay-at-home orders since late June to help stamp out an outbreak of the highly contagious Delta strain of the coronavirus.

It is not clear how long the lockdown will…

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