Too early to say impact of Vic action: RBA

Treasurer Josh Frydenberg has warned Australians not to be complacent despite the pandemic recovery.
Treasurer Josh Frydenberg has warned Australians not to be complacent despite the pandemic recovery.

Reserve Bank deputy governor Guy Debelle says the latest national accounts were a little stronger than he had expected, but was cautious about what impact the Victorian lockdown may have on the economic outlook.

The economy grew by 1.8 per cent in the March quarter, lifting the annual rate to 1.1 per cent, and confirming Australia has quickly returned to its pre-pandemic levels.

Fronting a Senate hearing on Wednesday evening Dr Debelle was asked whether recent events had changed his outlook compared with the central bank's quarterly statement last month.

"We got a growth number today that was a little bit, marginally stronger than those numbers back in May, which is good," Dr Debelle said.

Asked what impact the extended lockdown in Victoria might have on the outlook, Dr Debelle said previous lockdowns of three days have had little impact on the economy.

"We will just have to wait and see. It is longer than three days clearly, but given it's been one weekend, it's too early to tell," he said

Earlier, Treasurer Josh Frydenberg said the Australian economy enjoyed its strongest performance in over 50 years since sinking into a recession last year, but warned against complacency.

Speaking to journalists, he said the lockdown in his home state of Victoria is a reminder the global economy remains in a pandemic.

"Challenges remain. We cannot be complacent," Mr Frydenberg said.

But he said coming out of the COVID-19-induced recession, the economy has grown by 8.7 per cent - "that is the strongest growth since 1968".

"Most encouragingly of all, the economic recovery is increasingly driven by the private sector, even though economic support more than halved over the March quarter."

The Australian Bureau of Statistics said private investment contributed 0.9 percentage points to growth, with machinery and equipment investment recording its strongest quarter since December 2009.

Dwelling investment increased for the third consecutive quarter and was consistent with the recent surge in building approvals as households took advantage of the government's HomeBuilder grants scheme.

The HomeBuilder scheme ended in March.

Household spending added 0.7 percentage points to growth in the quarter.

Spending on services rose 2.4 per cent as COVID-19 restrictions continued to ease around Australia, while spending on goods declined 0.5 per cent but remained above pre-pandemic levels.

Deloitte Access Economics partner Kristian Kolding said Australia is in rare company.

"Only five other countries can boast an economy that's larger now than before the pandemic. And we achieved that goal while keeping COVID numbers lower than almost anywhere in the world," he said.

But BIS Oxford Economics chief economist Sarah Hunter said although the outlook is positive, the ongoing outbreak and lockdown in Victoria highlights the risk still present.

"The recovery will not be on completely solid ground until the pandemic is sustainably under control - this outcome is contingent on the continued roll out of the vaccine both domestically and globally," she said.

Shadow treasurer Jim Chalmers agreed.

"Australians can't bank on a first-rate recovery when their government is in the bottom-third of nations rolling out vaccines," Dr Chalmers said.

"Australia won't achieve stronger growth without fewer lockdowns, and we won't have fewer lockdowns until we finally fix the failures with vaccines and quarantine."

Australian Associated Press