Treasurer Wayne Swan is anticipating a swift rebound in the economy after it suffered its largest quarterly hit in 20 years due to this summer's natural disasters. The economy shrank by 1.2% in the March quarter, largely as a result of a slump in exports as coal mines were devastated by flooding.

The decline in gross domestic product was even bigger than during the depths of the global financial crisis in 2008. The national accounts released showed that growth in the year to March was just 1.0%. he said that "We expected to take a very big hit, and we did. "Today's national accounts demonstrate the major impact on the economy of extensive flooding and cyclone activity earlier in the year."

This weakness in the quarter was "broadly consistent" with the budget forecasts released last month, which foreshadowed a negative March quarter.

But Mr Swan is confident that this weakness will be followed by a strong rebound in the June quarter as the economic impacts of the disasters ease and reconstruction picks up.

Australia's economic fundamentals remained some of the best in the developed world, and growth should recover strongly as mines return to more normal levels of production capacity.

He said that "There simply isn't another country in the world that could have emerged from these disasters in such a strong position as Australia.”

The national accounts showed exports cut 2.4 percentage points from gross domestic product while business inventories stock on shelves and warehouses were a 0.5 percentage point drag on growth.

Among industries, mining suffered the most in the quarter as coal exports were hit by flooding, slicing 0.6 percentage points from growth.

In total, Mr Swan estimated that floods and cyclone reduced GDP by 1.7 percentage points. But Mr Swan said there were positives to take from the report, with household consumption and dwelling investment both adding 0.3 percentage points to growth.

(Sourced from www.heraldsun.com.au)