Australian Economy Reports Biggest Fall İn 20 Years

Its economy contracted by 1.2% in the first three months of the year compared with the previous quarter, the latest government figures showed.

The government said flooding and cyclones in the resource rich states of Queensland and Western Australia had a significant impact on growth.

Australia's economy is heavily reliant on exporting its natural resources.

"The economy has hit a temporary pothole courtesy of the natural disasters this year," said Besa Deda of St George Bank

'Honeymoon period'
Australia has not only had to deal with the twin natural disasters. Other factors have also slowed down its economy.

The country's growth has been powered by a boom in its resources sector.

As economies like China and India grew, the demand for Australia's resources witnessed a massive surge.

However, analysts say the situation is changing.

"We have been in a honeymoon period for a long time," said Jonathan Barratt of Commodity Broking.

"The time has come for realignment. As growth in China and India slows down, the pace of growth in Australia will also be affected," he added.

Relieved market

While the dip in growth was the biggest in two decades, analysts said that the numbers were better than the markets had expected.

"The market was very bearish in the last 48 hours," said Mr Barratt.

"The numbers are not as bad as people were fearing they would be," he added.

The effect of that was evident in the currency markets. The Australian dollar rose by 0.6% against the US dollar after the data was released.

It was trading close to 1.0723 against the US dollar in Asian trade