Australia's Federal Treasurer Wayne Swan has blamed the summer's floods and cyclones for the biggest quarterly contraction in the economy for 20 years.
Gross domestic product fell by 1.2% in the March quarter.
The last time GDP contracted was in the December quarter of 2008 - at the height of the global financial crisis, AAP reports.
The fall announced on Wednesday is the worst result since the March quarter of 1991, when the economy shrank 1.3%.
Mr Swan says it demonstrates the major impact on the economy of extensive flooding and cyclone activity earlier in the year.
This weakness is likely to be followed by a strong rebound in the June quarter as the economic impacts of the disasters ease and reconstruction picks up, he says.