SYDNEY: Australia’s economy raced ahead last quarter as consumers and businesses spent with abandon, lifting output back above where it was last year when pandemic lockdowns tipped the country into its first recession in three decades.
The economy expanded by a real 1.8% in the three months to March, data from the Australian Bureau of Statistics (ABS) showed on Wednesday. Economists in a Reuters poll had forecast a 1.5% rise following an upwardly revised 3.2% gain in the fourth quarter.
The solid back-to-back quarterly growth helped annual output climb 1.1% to A$525.7 billion ($408.05 billion), a major turnaround from last year’s recession low of $468.3 billion.
The better-than-forecast figures pushed Australia’s benchmark share index to record highs while supporting the local dollar near a one-week top.
Australia is in rare company here with only five other countries boasting an economy that’s larger than before the pandemic, said Kristian Kolding, a partner at Deloitte Access Economics.
On average, Australia’s rich world peers are 2.7% smaller than they were before the pandemic, Deloitte’s research found, with the United Kingdom shrinking almost 9%, the European Union contracting by 5% and the United States 1% smaller.
Australia announced strict social distancing rules in late-March 2020 to curb the coronavirus pandemic, forcing businesses from retailers to cafes and restaurants to down shutters while leading hundreds of thousands to queue up for welfare payments.
But the A$2 trillion economy has since staged a remarkable comeback by keeping virus numbers in check which has allowed businesses to reopen with confidence. Hefty and timely monetary and fiscal stimulus have been beneficial too.
Wednesday’s data showed the first-quarter expansion was driven by private investment which contributed 0.9 percentage points to growth with machinery and equipment investment clocking its strongest quarterly rise since December 2009.
A surge in dwelling activity also helped while household spending added 0.7 percentage points to growth.