The Australian economy grew better than expected in the fourth quarter of last year. Over the last quarter of 2019, the country’s GDP has grown by 0.5% on a seasonally adjusted basis, shows the data from the Australian Bureau of Statistics. This reading is higher than the forecast for 0.3% growth. On a year-on-year basis, Australian GDP growth is 2.2%, with an expectation of just 1.9%.

“I am taking a break because we expect the quarter to March growth to be negative, so I was worried that if the one from the previous quarter turned out to be zero or even slightly negative then we might be … in a technical recession”, said Diana Mousina, Senior Economist at AMP Capital.

Household spending is up 0.4% and government spending is up 0.7%, contributing 0.2 and 0.1 percentage points to growth. Lower commodity prices have strained trading conditions by 5.3% in the last three months of 2019, leading to a nominal GDP contraction of 0.3%, it is clear from the report.

The Reserve Bank of Australia’s leadership lowered its basic institutional interest rate to a new record low of 0.5% on Tuesday. Governor Philip Philip Lowe said in a statement announcing the monetary policy decision that “the coronavirus epidemic abroad is having a significant impact on the Australian economy at the moment, especially in the education and travel sectors”.

“The global coronavirus epidemic is expected to slow Australia’s progress towards full employment and the inflation target. Therefore, the Board of Directors considered that it was appropriate to further mitigate monetary policy in order to further support employment and economic activity”, added Philip Lowe.

The Australian government is ready to announce a fiscal “boost” to support the economy as the central bank and government work in tandem to isolate the economy from the shockwaves caused by the virus.

The Australian economy is growing in 2019 at its slowest pace in 28 years, with consumer demand supporting an economy that has expanded by only 0.1% over the last 18 months. There have been indications that private-demand-driven parts of the economy are recovering in the second quarter of 2019. But the reality is that Australia’s fourth-quarter GDP figures are not as important given what’s ahead.