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Sydney - Australia's economy was hit by its heaviest contraction for 20 years in the first three months of 2011, data showed Wednesday, shrinking 1.2% on-quarter after wild weather rocked mining and farms.
The Australian Bureau of Statistics said gross domestic product saw its largest quarterly fall since the March quarter of 1991, when the nation was last in the grip of recession, as the weather hammered key mining exports.
"Flooding which began in late December 2010 combined with cyclones in both Queensland and Western Australia have had a significant impact on the March quarter activity," the ABS said.
However, the figures, which also showed a 1.0% increase in growth from a year earlier, beat market forecasts of a 1.4% fall in the quarter and on-year growth of 0.7%.
The fall in net exports detracted 2.4 percentage points from growth, which Treasurer Wayne Swan described as the single largest hit to exports since records began. The volume of shipments fell 8.7%, Swan added, "the largest quarterly fall in 37 years".
Rallying commodity prices helped stave off more dire outcomes, driving the terms of trade 5.8% higher than the previous quarter and boosting gross national income by 0.3%.
It is the first contraction in Australia's growth since the depths of the global financial crisis, when GDP fell 0.9% in the fourth quarter of 2008 before rebounding on strong mining exports to Asia, dodging recession.
Unsurprising
The Australian dollar surged to $1.0722 from $1.0674 after the data was released.
Swan said the result was "unsurprising" in light of the unprecedented natural disasters.
The floods and cyclones in both northern and western Australia had cost $12bn in lost production, $6.7bn of which Swan said was in the March quarter, chiefly in the key coal mining industry.
Australia is home to the world's largest coal export port and sends millions of tonnes of the fuel annually to Asian steelmakers and power companies, with total 2010 shipments worth Aus$43bn.
Separate data released Tuesday on Australia's account deficit showed a 275 slump in coal exports between the December and March quarters, with mines swamped and vital rail and port infrastructure damaged or destroyed.
Steelmaking coal shipments plunged $1.8 billion or 35% in the three months to March, while thermal coal, burned to produce power, lost 39 percent or $434 million.
But Swan said the calamities were just a blip in Australia's broadly resilient growth, with the nation "just at the beginning" of investments worth $430bn, mostly in the key resources sector.
"Despite the magnitude of the disasters that we've seen in the March quarter they have not altered the strong underlying fundamentals of the Australian economy," said Swan.
"We should not let the adversity obscure the strong fundamentals that we have in our economy and the strong prospects we have for the future."
Analysts backed Swan's optimism, tipping a bounce in the June quarter due to resilient domestic demand and private consumption and recovery in the disaster-hit north.
"You actually had domestic demand up 1.3%, in stark contrast to the headline number, which was weighed down enormously by the disruptions to exporters," said Westpac economist Huw McKay.
"The economy is relatively strong, backed up by a very tight labour market, and this is a temporary disruption."
The government last month forecast growth of 2.25% in 2010-11, recovering strongly to 4.0% the following year.
