( Financial Times ) -- Australia 's resource-rich economy expanded at twice the pace expected by economists in the first quarter of 2012 , lifted by an unexpected increase in household spending and continued heavy investment in mining projects . Gross domestic product advanced 1.3 per cent from the previous quarter , when it rose a revised 0.6 per cent , according to the Australian Bureau of Statistics . This was well above market expectations of a 0.6 per cent rise and , excluding the quarter that followed the 2011 flooding in Queensland , was the fastest acceleration in economic growth in five years . In annual terms , GDP growth in the year to March was 4.3 per cent . The strong reading came a day after the Reserve Bank of Australia lowered its benchmark interest rate to 3.5 per cent -- the lowest level in almost three years -- because of `` moderate domestic growth '' and a `` weaker and more uncertain international environment '' . Wednesday 's report showed capital expenditure in the mining sector up 14 per cent in the first quarter of the year , and the main driver of a 20 per cent increase in private infrastructure investment . But it was a 1.6 per cent rise in household spending during the quarter that surprised the market . `` Despite their negativity about a lack of wealth growth and cost of living increases , the consumer is spending money , '' said UBS economist Scott Haslem . Treasurer Wayne Swan hailed the figures as `` stunning '' and said they showcased the `` rock-solid economic fundamentals '' that put Australia in a `` league of its own '' . `` This is a remarkable outcome and reaffirms Australia 's position as one of the strongest economies in the world , with the Australian economy growing faster than every single major advanced economy in the March quarter , '' said Mr Swan . But economists said the data , which preceded the latest bout of global economic worries , might prove to be the growth peak for Australia , and highlighted the unevenness in growth between the mining and non-mining sectors of the economy . Final demand -- a measure of spending in the local economy by the private and public sectors -- in the mining centres of Western Australia and Queensland rose 13.6 per cent and 7.8 per cent year-on-year respectively , compared with 2.1 per cent in New South Wales and 1.9 per cent in Victoria . `` The result is very likely to be the high water mark for growth , with more cautious households , further declines in dwelling activity , and much bleaker offshore conditions , which will be an ongoing drag on export volumes , to compromise growth from here , '' said JPMorgan economist Stephen Walters . `` Despite the upbeat headline outcome , the picture painted today still is one of an economy not quite firing on all cylinders . Output from the miners , for example , bounced 2.3 per cent quarter-on-quarter and other industries turned in decent performances . Manufacturing output , however , dived another 0.8 per cent quarter on quarter ( the sixth decline in the last eight quarters ) '' , noted Mr Walters . However , the Australian dollar rallied following the release of the report , rising 1 per cent to $ 98.40 cents as forecasts for further rate cuts were revised . `` The market 's expectation for a terminal cash rate around 100 basis points below the current level is not compatible with the resilience of the Australian economy , '' said Citigroup economist Paul Brennan . © The Financial Times Limited 2012 .
Australia 's resource-rich economy expanded at twice the pace expected by economists . Comment: Was the fastest acceleration in economic growth in five years .