Australia's economy contracts most in 20 years

The Australian economy shrank 1.2 percent in the first quarter from the previous quarter, suffering its biggest contraction in 20 years, after extensive flooding hit coal exports, but a mining boom is expected to help growth bounce back quickly this year.

Data released Wednesday showed that annual growth in gross domestic product had slowed to a tepid 1 percent, down from 2.7 percent. The results were in line with a Reuters poll of analysts.

Damage from the flooding and Cyclone Yasi came at a time when rising utility and fuel prices were already crimping household spending and a strong Australian dollar was taking a toll on industries like manufacturing and tourism.

Add to that the effect of earthquakes in Japan and New Zealand, two major trading partners, and it is not surprising that the economy went into reverse. 

Source: NYTimes.com