Withdrawal of policy support a headwind to activity

With a record plunge in output, Australia entered its first recession in 29 years last quarter. Huge public support payments resulted in an increase in both corporate profits and household income and meant that the household saving rate surged to levels last seen in the 1970s. Support payments are now being scaled back but households have plenty of scope to increase spending. Still, we only expect GDP to return to pre-virus levels by the end of next year.