Australia's economy avoided the ignominy of contracting but only narrowly grew at a sluggish 0.3 per cent in the first three months of the year.

Key points: GDP growth slows to 1.7pc per annum, slowest pace since tail end of GFC

GDP growth slows to 1.7pc per annum, slowest pace since tail end of GFC Household spending propped up by shrinking savings

Household spending propped up by shrinking savings Higher commodity prices lift national income, falling export volumes drag on growth

The soft reading means in seasonally adjusted terms, annual growth has slowed to 1.7 per cent from the 2.4 per cent record in the fourth quarter last year.

The Australian Bureau of Statistics reported growth across 17 of the 20 industries included in the national accounts, with the strongest contribution coming from the services sector in areas such as finance, health care and social services.

The trade sector was the biggest drag with exports down 2.6 per cent for the quarter, led down by iron ore and coal shipments which were interrupted by bad weather in the quarter.

Overall, exports lopped 0.4 per cent off GDP.

Investment in housing was also weak, down 4.4 per cent over the quarter, falling in every state except Victoria, to record the largest quarterly slump since the depth of the GFC in 2009.

GDP on an annualised basis slides to its lowest growth since 2009. ( Supplied: ABS )

Household consumption grew despite weaker retail spending, driven up by rising costs in non-discretionary areas such as electricity, gas, insurance and fuel.

Loading

However, much of that increased spending came from households digging into their savings as the household savings ratio fell from 5.1 per cent to a decade low of 4.7 per cent.

CBA's Gareth Aird noted the well below trend growth showed the year started with a whimper after the solid growth at the end of 2016.

Loading

Mr Aird said while poor weather had an impact, the weakness extends well beyond that.

"The slowdown in the domestic economy has occurred at a time when the global economic backdrop has improved," he said.

"This suggests that policymakers have their work cut out for them if Australia is to post the kind of growth outcomes they have forecast over 2017."

On Tuesday, Reserve Bank governor Philip Lowe said while March quarter growth was expected to slow, he still expected GDP to accelerate to its forecast pace above 3 per cent in coming years.

National income rises, but gains concentrated in corporations

ANZ's Felicity Emmett said despite some strength in business conditions being evident in the report, the economy lost momentum over recent months.

Loading

"There looks to have been a sustained step-down in the pace of consumer spending growth as households adjust to the new world order of very low wage growth," Ms Emmett said.

"On that front, wages growth actually picked up in the quarter, but growth in unit labour costs remains negligible, which suggests that inflation is likely to stay low."

Higher export prices for key commodities lifted Australia's terms of trade — the ratio of export prices to import prices — by almost 7 per cent over the quarter and 25 per cent, year-on-year.

That increased purchasing power pushed up real net national disposable income per capita — a proxy measure for increased living standards — by 0.8 per cent.

However, GDP per capita, which excludes the impact of population growth, fell 0.1 per cent for the quarter to be virtually flat for the year.

RBC's Su-Lin Ong said the terms-of-trade boost was unlikely to be repeated in coming quarters as iron ore and coal prices were well past their peaks earlier this year.

"Of note, the terms of trade-induced gains in income continued to be captured by the corporate sector, as evidenced by another gain in the profits share, with the wages share down again," Ms Ong said.