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Australia's economy bounces back to dodge recession

he Australian Bureau of Statistics said the country's annual rate of growth was a faster-than-expected 2.4%
he Australian Bureau of Statistics said the country's annual rate of growth was a faster-than-expected 2.4%

Australia's economy rebounded strongly in the December quarter, growing by 1.1% to dodge a technical recession on the back of buoyant exports and household spending. 

The stellar bounceback followed a shock contraction of 0.5% in the three months to September - the worst result in eight years. 

The Australian Bureau of Statistics said the annual rate of growth was a faster-than-expected 2.4%, from 1.8% in the previous quarter.

Analysts had been expecting quarterly growth of 0.8% and an annual rate of 2%. 

It meant Australia, which is transitioning from a mining investment boom to broader growth, avoided a technical recession - when the economy goes backwards for two quarters in a row.

"Our growth continues to be above the OECD average and confirms the successful change that is taking place in our economy as we move from the largest resources investment boom in our history to broader-based growth," the country's Treasurer Scott Morrison said. 

"While this growth result is welcome, we must continue to remember that our growth cannot be taken for granted and is not being experienced by all Australians in all parts of the country in the same way," he added. 

Soaring commodity prices has seen a marked turnaround in Australia's trade position in recent months with exports providing a key source of growth in the December quarter.

Net exports added 0.2 percentage points to gross domestic product, having detracted from the growth rate in the previous quarter.

Despite subdued wages growth, household spending was also a key driver, contributing 0.5 percentage points while public investment in infrastructure added 0.3 percentage points.

Australia has avoided a recession for more than a quarter of a century. 

But the economy has charted a bumpy course in recent years since the end of the mining investment boom. 

The central bank has eased rates by 300 basis points since November 2011 - including two cuts in 2016 - to support growth in non-resources industries. 

But even so, non-mining business spending has been soft.

Last month, the IMF said in a report that the Australian economy was resilient and enjoyed strong policy frameworks.

But it warned of "significant risks and uncertainties" ahead, including the rise in protectionist policies in the global economy and a significant slowdown in Australia's main trading partners.