September 2, 2021: -Australia’s economy was already slowing in the June quarter before widespread coronavirus lockdowns slammed everything into reverse, which left the country in a desperate race to vaccinate in the hope of opening up to recovery by Christmas.

On Wednesday, the Australian Bureau of Statistics figures showed a gross domestic product that increases 0.7% in the June quarter. That was a step down from 1.9% in the March quarter but reached the top forecasts of 0.5% and avoided analysts’ for the negative outcome.

Annual growth was the fastest in modern history at 9.6%, but the pandemic caused a severe contraction in the June quarter in the previous year, dropping from the calculation.

That painful pattern was to play out again as strict stay-at-home rules in Sydney, Melbourne, and Canberra is set to see the economy shrink 2% to 3% or more this quarter.

The conservative government of Prime Minister Scott Morrison is pinning its hopes on a vaccination rollout that is gathering steam after a ham-fisted start.

“Assuming the vaccination rollout continues at its current pace, it is probably the Eastern states will start to re-open in the December quarter, and this will enable the economy to recover,” said the Chief Australia Economist for BIS Oxford Economics, Sarah Hunter.

“But the shift to a new Covid-normal, where there are persistent cases in the community, will make few people cautious, and the recovery this time around will be drawn out into the next year.”

The Reserve Bank of Australia has been counting on a rapid recovery once the restrictions ease. However, the spread of the Delta variant has made its latest forecasts for growth look optimistic.

The central bank is under pressure to delay a tapering of its bond-buying program planned for this month and is not expected to raise interest rates from record lows of 0.1% by the year 2023.

The June quarter figures did show strength in consumer and government spending, housing, and business investment, though much of that was offset by drags from net exports and inventories.

On the positive side, nominal GDP hit a record A$2.07 trillion for the year, making it the 11th largest economy globally. Output stood at A$80,432 for all of Australia’s 25.6 million residents.

That outperformance owed to super-high prices for many of the country’s resource exports, boosting its terms of trade by a massive 7.0% in the quarter and 24% for this year.

The flood of cash boosted company profits, tax receipts, and employment, which help lift national incomes and nominal GDP by a robust 3.2% quarter.