Australia is heading back into recession Our recession will be painful, protracted and political. Save Share It is more likely than not now that Australia is heading back into recession through the second half of the year. This will look and feel very different to last year’s downturn. It will be less dramatic, though more protracted. Indeed, the downturn may well extend into next year. Underpinning these forecasts is an expectation that South Australia and Victoria emerge from lockdown soon, and that Greater Sydney follows in the next couple of months. The household savings ratio is also still more than twice pre-pandemic lows (11.6 per cent versus 5.4 per cent), hence there is a lot of dry powder. Moreover, with Q3 GDP now set to be a weak print, it should be arithmetically straight-forward for an improvement in Q4, or so the story goes.