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Australia’s GDP has grown by 3.1 per cent during the December quarter, beating market expectations of a 2.5 per cent increase, official figures show.
ABS figures have shown the economy has recovered by 3 per cent of the second consecutive quarter, which has not happened for over 60 years.
However, despite the rapid recovery, the ABS states Australia’s economic activity remains 1.1 per cent lower than recorded in the 2019 December quarter.
The economic recovery was largely driven by household spending, which is up by 4.3 per cent, with pre-Christmas sales and Victoria emerging from lockdown strongly contributing to the growth in spending.
“Despite growing at 10.4 per cent for the quarter, household spending in Victoria was 7.2 per cent below its pre-COVID level. Household spending for the rest of Australia, excluding Victoria, was 1.1 per cent lower than pre-COVID levels,” head of national accounts at the ABS, Michael Smedes, said.
Private investment rose 3.9 per cent and contributed 0.7 percentage points to growth.
There were rises across both housing and business investment with improved conditions, which coincided with government initiatives, such as HomeBuilder and the expanded instant asset write-off.
Compensation of employees rose 1.5 per cent as employment and hours worked increased with underlying activity in the economy.
Treasurer Josh Frydenberg said the national accounts were proof the economic plan was working.
“This is a very encouraging performance from the Australian economy considering the abyss we were staring into at the start of the pandemic.”
“Our economy outperformed all other advanced economies in 2020.”
Mr Frydenberg said that as the government’s support continues to taper off, private investment is stepping up.
“With business and consumer confidence back to pre-pandemic levels, the savings ratio fell from 18 per cent to 12 per cent.
“While still three times higher than its pre-pandemic levels, consumption will continue to support the Australian economy,” he said.
Mr Frydenberg said the Australian economy starts 2021 in a strong position.
“The job is not done, there are challenges ahead, but you wouldn’t want to be in any other country other than Australia as you begin 2021,” he concluded.