Australia is not heading for a recession despite weak economic growth figures, the Federal Government says.

Key points: Lowest growth rate recorded in two years

Lowest growth rate recorded in two years Mr Hockey blames factors such as weather-related interruptions and mineral exports

Mr Hockey blames factors such as weather-related interruptions and mineral exports Decreased reliance on mining investment underway

Yesterday the economy recorded its lowest growth rate in two years of 0.2 per cent in the three months to June.

The Australian Bureau of Statistics said reduced mining and construction activity weighed on growth, along with declining exports.

The Government acknowledges that other countries heavily reliant on their resource sectors, like Canada and Brazil, have fallen into recession, but Treasurer Joe Hockey said Australia would not be next.

"There is no risk of recession in Australia," he told Channel Nine.

"But, if we don't continue down the path of delivering free trade agreements, getting rid of taxes, getting rid of regulation, and opening up more of the Australian economy to competition, then we will risk significant job losses and slower economic growth."

Mr Hockey blamed one-off factors such as weather-related interruptions to mineral exports for the softer-than-expected figures.

He said there was evidence the transition away from a reliance on mining investment was well underway.

"Looking forward, we are already two months into the first quarter of a new financial year, and the Government's May budget is already adding momentum to the Australian economy.

"Business conditions outside the mining sector have risen to their highest level in almost five years."

Finance Minister Mathias Cormann agreed yesterday's growth figures did not indicate Australia was on the brink of recession.

"The Australian economy continues to grow, despite the biggest fall in our terms of trade in about 50 years," he said.

"What we need to do is we need to keep working to lift productivity, to bring down the cost of doing business and to ensure our economy's as competitive as possible moving forward."

Independent economist Saul Eslake said he did not foresee a recession in Australia either.

"[But] we are nonetheless more vulnerable to any external shocks that might occur than would be if the economy had more momentum," he said.

Dollar decisively below 70 US cents

Official figures confirmed a sharp deterioration from the 0.9 per cent growth recorded in the March quarter and drove the dollar decisively below 70 US cents for the first time in six years.

Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume. Watch Duration: 7 minutes 41 seconds 7 m Mathias Cormann says the government is doing the right things to keep the economy on track.

Along with the first quarter GDP in 2013, it was the weakest growth since early 2011, which was affected by the severe floods in Queensland, and the equal second weakest since the Global Financial Crisis-affected contraction in December 2008.

In nominal terms — with the effects of inflation excluded — GDP growth was 1.8 per cent, the weakest figure since 1962.

Mining production slipped 3 per cent in the latest quarter, while net exports detracted 0.6 per cent from GDP growth.

The Australian dollar twice dipped briefly below 70 US cents in the hours before the data was released, but fell to 69.86 US cents immediately after the ABS data was published - the first time the currency had fallen to that level since 2009.

On Wednesday the dollar had recovered slightly to 70.3 US cents.