A staggering 4.1 per cent annual growth has made Australia the star-performing economy in the developed world in 2002.
A greater consumption of retail goods and health services along with strong business profits contributed to a domestic boom, in stark contrast to the rest of the world, according to national account figures released yesterday.
The figures, which pushed the share market to an all-time high yesterday, showed that inflation was still low and productivity was growing at record levels.
Household consumer spending contributed 0.8 per cent to the 1.3 per cent growth in the quarter and business investment was the surprising donor of 0.3 percentage points.
Government spend (0.2 per cent) and investment (0.6 per cent), especially in defence, were significant forces in holding the economy steadfast.
Due to a weak world economy, exports cut 1.5 percentage points off growth, however this was countered by a big spend in farming, with the increase of inventories adding 0.7 per cent to the tally.
Australia's 4.1 per cent annual growth rate compared well with anaemic results from the US (0.4 per cent), Britain (1.7 per cent) and a G7 average of 0.4 per cent. Sectors of the developing world, however, showed strong growth, especially China.
Commenting on the results yesterday, Federal Treasurer Peter Costello warned not to expect a better Budget outcome. Stronger corporate profits will be offset by lower company tax rates, he said.
Contemplating the possible effects of the figures, industry speculators said the Reserve Bank could be expected to raise interest rates if the market continued to show confidence. Analysts are also expecting employment to rise as business becomes more confident.