Federal Treasurer Josh Frydenberg has warned the road out of recession for Australia will be "hard and bumpy" after the economy contracted by a record 7.0 per cent.
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The nation is its first recession since the early 1990s as a result of the lockdowns to suppress the COVID-19 pandemic.
"The numbers are extremely sobering," Mr Frydenberg told reporters in Canberra.
The June quarter result, the largest quarterly fall since the Australian Bureau of Statistics started plotting the nation's economic growth in 1959, was even worse than the six per cent decline economists had expected.
In the March quarter, the economy had contracted by 0.3 per cent.
A technical recession is defined by two consecutive quarters of negative growth.
Wednesday's release of the national accounts also saw annual gross domestic product shrink by 6.3 per cent, the biggest yearly decline since 1945.
Mr Frydenberg said the pandemic has wreaked havoc on both the domestic and global economy.
And the pain won't stop there, with Mr Frydenberg saying the September quarter could be slightly negative to flat as a result of Victoria's harsh lockdown, given the state accounts for around a quarter of national output.
"The road to recovery will be long, the road to recovery will be hard, the road to recovery will be bumpy," he said.
But he said Australia is better placed than most other nations, which have reported far larger economic contractions.
Former Liberal treasurer Peter Costello said the Morrison government has responded to the crisis well with enormous fiscal stimulus, alongside monetary stimulus from the Reserve Bank.
"The hard work is going to begin when this stimulus starts getting withdrawn, which will have to happen at some point," Mr Costello, who is now head of the Future Fund, said.
"It's going to be hard to choose the time and do it in an orderly way to make sure we get the economy growing."
The national accounts show private demand detracted a hefty 7.9 percentage points from growth in the quarter, driven by a 12.1 per cent fall in household expenditure which included a 17.6 per cent drop in services expenditure.
"The June quarter saw a significant contraction in household spending on services as households altered their behaviour and restrictions were put in place to contain the spread of the coronavirus," ABS head of national accounts Michael Smedes said.
On the positive side, net exports (exports minus imports) contributed a large one percentage point to the result, while public demand added 0.6 percentage points, driven by health-related spending by state and local governments.
The economic downturn has already seen the number of people unemployed push past more than one million for the first time.
Treasury has warned a further 400,000 Australians could join the dole queue before Christmas, partly as a result of Victoria's lockdown.
"The most important test of the Morrison government's management of the recession and its aftermath is what happens to jobs," shadow treasury Jim Chalmers said.
"It beggars belief that the worst recession since the Great Depression has not been enough for the Morrison government to bring forward a proper jobs plan."
Australian Associated Press
