What is a recession?
The economy shrinks or stalls for a while and a lot more people lose their jobs.
The risk is mainly to jobs and hours, and it reaches some industries before others.
The rule
- There is no single definition. The Reserve Bank says it is generally agreed that a recession is a period of reduced output together with a significant rise in the unemployment rate.
- The test used most in the media is a technical recession: two quarters in a row of negative growth in real GDP. The Reserve Bank lists its shortcomings. GDP can be weak without being negative and still come with a big rise in unemployment. Some parts of GDP are volatile. And a quarter's figure is later revised, so it can flip sign.
- Some people count GDP per person instead, to take out population growth. In the March quarter 2026 GDP grew 0.3% but GDP per person fell 0.1%.
- Latest figures. Real GDP rose 0.4% in the June quarter 2026 and 2.1% over the year (ABS, 2 September 2026). Unemployment was 4.7% in September, seasonally adjusted, and 4.6% in trend terms (ABS, 15 October 2026).
- Next releases. Labour force for October on 19 November 2026. GDP for the September quarter on 2 December 2026, then the December quarter on 3 March 2027.
What people ask
What does a recession mean for Australia?
The Reserve Bank says a weak patch in output usually means job losses and a rising unemployment rate. It also says household spending and business investment are usually low, and more households and businesses cannot repay loans.
What happens if Australia goes into recession?
Recessions bring hardship for households and businesses and can have long lasting effects, the Reserve Bank says, which is why central banks and governments try to reduce how often and how deep they are.
How are we not in a recession if things feel bad?
The common test needs two quarters in a row of falling GDP. GDP can grow slowly while jobs get harder to find, and population growth can hide a fall in what each person produces. The model above lets you try both ways of counting.
Who decides when it is a recession?
There is no single definition, and the Reserve Bank says views differ about how to identify one. The Bureau of Statistics publishes the figures, and the media usually uses the two quarters test. The next GDP figure is on 2 December 2026.