It’s official: Australia has staged its fastest recovery from a recession in 45 years.
Australia's economy is now larger than before the coronavirus pandemic.
The latest figures from the Australian Bureau of Statistics show that Gross Domestic Product (GDP) grew 1.8 per cent from January to March this year.
The economic activity made up for the significant (7%) contraction last year and has grown 1.1% over the year.
Our growth was largely driven by business and consumer spending boosted by government stimulus, but economists warn that growth will slow as a result of Victoria's extended lockdown, the slow vaccine rollout as well as our closed international borders.
These result puts Australia among a group of just five other nations to have emerged from the worst economic shock in nearly a century with higher levels of production.
The Australian economy has bounced back to pre-pandemic levels.
"With 1.8% growth in the March quarter 2021, Australian economic activity has recovered to be above pre-pandemic levels and has grown 1.1% through the year,” Head of National Accounts at the ABS Michael Smedes said.
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Household income fell from 12.2 per cent to 11.6 per cent in the quarter, meaning Aussies have begun spending the money they were stashing away during the pandemic.
- Consumer spending grew by 1.2%. The snap lock-downs and the floods were a constraining factor. The reopening was supportive of increased spending on services, as restrictions were relaxed further.
- Dwelling activity grew by a brisk 6.4%, broadly as expected, with the sector on fire in response to aggressive stimulus, triggering a bring forward of activity.
- Business investment advanced by 3.6%, a little above the 3% expected. This includes a strong 10.3% rise in equipment spending, supported by tax incentives.
- Inventories are being rebuilt, as to be expected. The contribution of 0.7ppts was a fraction below our forecast of 0.8ppts.
Household savings remain elevated
The Covid crisis of 2020 caused many Aussies to state their cash, and even though we are now spending more the latest stats show that the household saving ratio remains elevated, which will be supportive of future spending.
It moderated only modestly to 11.6% from 12.2% in December.
