However, market had anticipated a rise of 0.8 percent GDP q/q and 2.8 percent on year.
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The better-than-expected result is likely to have pushed up the rate of quarterly growth beyond the 0.6 per cent average estimate in a Bloomberg survey of economists.
The foreign exchange market responded to the news of unexpected strength in the economy by pushing the Australian dollar up from around 71.9 United States cents to over 72.3 within 10 minutes of the release of the data.
The healthy growth figures give the Reserve Bank of Australia (RBA) room to wait to see whether inflation picks up before deciding if another rate cut is needed.
Data from the Bureau of Statistics on Wednesdy (June 1) showed gross domestic product (GDP) grew 1.1 per cent in the three months to March, from the previous quarter when it rose an upwardly revised 0.7 perc ent. “Volumes of inbound tourism – an export – are rising while outbound tourism is declining”, John Peters, a senior economist at Commonwealth Bank of Australia who forecast a 1.1 percent gain, said ahead of the release.
“We are still expecting two more rate cuts from the RBA, in August and December, as the deterioration in core inflation measures is unlikely to turn around in just one quarter”, he concluded.
The Australian economy is riding a tailwind of rebounding consumer spending, net exports and a vibrant housing sector. Australians are taking advantage of the 19,000 distinct trade opportunities in our export trade agreements.
Domestic final demand, which is the total amount of spending in the economy, only rose by 0.1 per cent in the quarter and 0.9 over the year.
While mining still provides the largest contribution of 0.5 percentage points to growth in the quarter, this is now almost matched by services at 0.4.
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The Coalition’s economic plan for jobs and growth does not add to the tax burden on the Australian economy and encourages Australian businesses to expand, hire more people and to purchase more machines, equipment and supplies. “Annualised growth over the past six months has been 3.6%”.
