By Swati Pandey and Wayne Cole
SYDNEY (Reuters) – Australia’s economy extended its rapid recovery in the first quarter as consumers and businesses dropped out of spending, pushing production back above what it was last year when pandemic lockdowns plunged the country in recession.
The economy saw real growth of 1.8% in the three months to December, according to data from the Australian Bureau of Statistics (ABS). Economists in a Reuters poll had forecast a rise of 1.5% after a gain revised upwards of 3.2% in the fourth quarter.
Strong back-to-back quarterly growth helped annual output soar 1.1% to A $ 525.7 billion ($ 408.05 billion), a major turnaround from the low of $ 468.3 billion in the recession of last year.
The expansion in the first quarter was driven by private investment which contributed 0.9 percentage point to growth, with investment in machinery and equipment registering its largest quarterly increase since December 2009.
A surge in housing activity also helped, while household spending added 0.7 percentage point to growth.
Consumers are expected to continue driving growth, with data on credit and debit card spending from major banks as well as official figures on retail sales, employment and construction activity remaining strong.
The Reserve Bank of Australia (RBA) cut interest rates three times last year to a record 0.1% and launched an unprecedented quantitative easing program as the government announced a wage subsidy program to keep people in employment. Banks have deferred payments on home loans and reduced lending rates to stimulate credit growth.
($ 1 = Australian dollars 1.2780)
(Reporting by Wayne Cole and Swati Pandey; Editing by Ana Nicolaci da Costa)