Australia's economy grows by more than expected
Australia's economy grew by more than expected in the first three months of the year, allaying fears of a global slowdown hitting its growth.
The economy grew by 1.3% during the period from the previous three months. Analysts had forecast growth of 0.5%.
Compared with the same period last year, the economy grew by 4.3%.
There have been fears that slowing global demand for commodities and a stagnant domestic market may hurt Australia's growth.
However, some analysts said that the latest data showed that Australia was well placed to sustain growth.
"The data suggests that even though we are still concerned about the global economic uncertainty, the impact on the Australian economy has been vastly over estimated so far," Michael McCarthy of CMC Markets told the BBC.Balanced growth
One of the biggest worries about the Australian economy has been that while its mining sector has been booming in recent years, other parts of the economy have not been doing too well.
End Quote Michael Blythe Commonwealth Bank of Australia
It's all about forward-looking risks and Europe is the main source of those”
However, the latest gross domestic product (GDP) data indicated that the trend may be changing.
It showed that sectors such as professional, scientific and technical services and the financial and insurance sectors contributed as much as mining to overall economic growth.
Household spending also rose during the period, which analysts said was an indication that consumer sentiment remained upbeat.
"The thing that catches my eye is very strong consumption numbers and an unusually large contribution from professional and scientific services," said Matthew Johnson a senior economist at UBS.'Forward-looking risks'
Despite the encouraging numbers, analysts said that Australia's economy continued to face a threat from global economic uncertainties, especially developments in the eurozone and a slowdown in China's growth.
They said the conditions both in Europe and China had deteriorated since March this year and that this may hurt growth in the future.
In China, one of the biggest markets for Australian commodity exports, growth in both the manufacturing and non-manufacturing sectors has slowed in recent months.
Meanwhile in the eurozone, the sovereign debt crisis has worsened, with some analysts even warning that the policymakers have a "three-month window" to save the euro.
On Tuesday, the Reserve Bank of Australia cited these developments as key risks to growth as it announced its second rate cut in as many months.
"It's all about forward-looking risks and Europe is the main source of those," said Michael Blythe chief economist at the Commonwealth Bank of Australia.
However, Mr Blythe added that the latest growth numbers may prompt the central bank to hold back on making aggressive cuts "unless something really does go wrong in Europe".