CANBERRA, AAP – Australia’s sharp recovery from last year’s recession is expected to have extended into the early months of 2021.

But a Reserve Bank of Australia official has warned the rebound may not be as robust if households and businesses show the same caution as they did following the Global Financial Crisis.

Forecasts for Wednesday’s national accounts for the March quarter centre on a 1.5 per cent rise, although expectations are as high as 2.1 per cent.

This will lift the annual growth rate into positive territory, indicating the economy has fully recovered to its pre-pandemic levels

The economy grew by more than three per cent in the previous two quarters, rebounding from the steep seven per cent contraction in the July quarter.

However, just hours before the data release, RBA head of economic analysis Brad Jones issued a note of caution in an address to the Minerals Week Australia-Asia Investment Outlook conference in Canberra.

“Here in Australia, it would seem premature to completely rule out the possibility of an overhang of cautious behaviour by households and firms, as seen internationally following previous shocks like the Great Depression and the GFC,” Mr Jones said.

Even so, he said the fact many Australian household and business balance sheets were in better condition than before the pandemic suggests the domestic economy could follow a quite different trajectory to past disasters.

“This is consistent with our central scenario for the Australian economy and the surprising strength in the domestic recovery to date,” he said.

The RBA left the cash rate at a record low 0.1 per cent at Tuesday’s monthly board meeting, reiterating it did not expect to lift interest rates until at least 2024.

Economists made last-minute, upward adjustments to their March quarter growth forecasts after a spread of quarterly reports painted an even more positive picture, having previously predicted a 1.1 per cent rise.

This was the result of exports having a smaller 0.6 percentage point drag on growth in the quarter than first thought and business inventories – stock on shelves and in warehouses – contributing a large 0.8 percentage points.

That followed strong home building and investment figures.