Australia’s economy grew at 0.3% in the first three months of the year, confirming that the country will enjoy 26 years without a recession.
Strong growth was recorded in service industries such as finance and insurance, wholesale trade and healthcare, the Australian Bureau of Statistics said on Wednesday, but the manufacturing sector slipped backwards for the 10th time in 11 quarters.
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It means Australia’s economy has grown by just 1.7% over the 12 months to the end of March.
It marks the slowest pace of annual growth since late 2009, in the aftermath of the global financial crisis.
The Australian dollar spiked 0.4% on the news, sending the unit to US75.4c.
It puts Australia’s annual growth rate below the Reserve Bank’s forecast of 2% to 3% for this year, prompting some economists to say the RBA will now not want to raise rates until 2019.
The RBA left rates at an historic low of 1.5% this week, where it has sat since August last year.
The treasurer, Scott Morrison, welcomed the 0.3% growth figure, saying it demonstrated Australia’s resilience, but he acknowledged there were “challenges” in the data, particularly with dwelling investment and net exports.
“Weather conditions during the March quarter did affect exports,” Morrison said. “I’m advised particularly on other exports in the west. Exports declined by 0.6% in the quarter, detracting from growth … particularly in the aftermath of Cyclone Debbie.”
Michael Workman, a Commonwealth Bank senior economist, said the growth figure was disappointing, particularly since global conditions had been improving lately.
“The Australian economy began 2017 with a whimper following a decent pace of expansion in the final quarter of 2016,” he said.
“The weakness in today’s data extends beyond the weather, and the slowdown in the domestic economy has occurred at a time when the global economic backdrop has improved.
“This suggests that policymakers have their work cut out for them if Australia is to post the kind of growth outcomes they have forecast over 2017.”
The last time Australia recorded two consecutive quarters of negative growth was in March and June 1991.
The Australian Bankers’ Association has jumped on the ABS figures – which show the finance sector is growing at an annual rate of 4%, compared with 1.7% for the economy – arguing that in this environment the Turnbull government’s new tax on major banks was contrary to the national interest.
“You don’t win the race by knobbling your fastest runners,” said the ABA’s chief executive, Anna Bligh. “And you can’t tax your way to prosperity. The government needs to rethink this new tax.”