AUSTRALIA’S economy defied market forecasts with stronger-than-predicted expansion in the January-March period, driven by net exports and household spending, strengthening expectations interest rates will remain on hold for some months.

    Economic growth expanded by 1.1 percent in the first quarter for an annual year-on-year reading of 3.1 percent, the highest in recent years and far above economists’ estimates of 0.8 percent and 2.9 percent.

    The Australian Bureau of Statistics data make the Australian economy one of the best-performing among developed nations and comes just a month before national elections, which are expected to be tightly contested.

    “This confirms the Australian economy is continuing to grow, outstripping the world’s most advanced economies, the United Kingdom, the United States, the eurozone,” Treasurer Scott Morrison said.

    With the mining-dependent economy shifting away from an unprecedented boom in resources investment and the Reserve Bank of Australia slashing interest rates to a new record-low last month amid weak consumer prices, the ruling conservative government has been campaigning on a platform of jobs and growth.

    Prime Minister Malcolm Turnbull said there were “strong signs” about growth in the figures but warned the global economic situation remained uncertain.

    “There is plenty of risk out there on the horizon. We are in an uncertain economic environment globally. Many opportunities, great opportunities but great challenges,” he said.

    JP Morgan economist Tom Kennedy said the mix of growth matched analysts’ expectations, with “net exports delivering the bulk of the growth, if not all.”

    The data showed exports contributed 1 percentage points to the March quarter growth, driven by strong resources exports, particularly on the back of a ramp-up in liquefied natural gas production from new projects, National Australia Bank senior economist David de Garis said.

    “That [exports] story has a lot further to run, but [there’s] also evidence that the demand side from tourism has increased, and perhaps signs that Chinese demand for resources may have increased so far this year,” he said.

    Household spending added 0.4 percentage points to the GDP data.

    The Australian economy has been charting a rocky growth path as it exits the mining investment boom that has helped it avoid a recession for a quarter of a century.

    Despite the healthy headline numbers, the figures also showed the income side of the economy stayed weak.

    The terms of trade — a ratio that measures export prices to import prices — fell 1.9 percent for the quarter. Real net national disposable income, a measure of the nation’s earnings which factors in the terms of trade, edged up 0.2 percent for the three months for an annual reading of -1.3 percent.

    (SD-Agencies)