Prime Minister Scott Morrison and Treasurer Josh Frydenberg.Credit:Alex Ellinghausen
"I want to emphasise that Germany,the United Kingdom,Sweden,Singapore and others experienced negative growth in the June quarter,"he said.
"The Australian economy has shown remarkable resilience,and these numbers are a repudiation of all those who have sought to talk down the economy."
Shadow treasurer Jim Chalmers said the government should bring forward its mid-year budget update from December to get the economy out of its rut.
"If the Treasurer thinks that these weak economic growth numbers are good,then he's even more out of touch than we feared,"he said
Wednesday's figures showed the household saving ratio fell to its lowest level since December 2007,in a sign consumers are saving less to make ends meet. That's despite overall consumer spending slowing.
New car sales were down 10.1 per cent compared to August last year,with each segment of the market recording a downturn as consumers increasingly avoid expensive purchases.
The figures,released separately by the Federal Chamber of Automotive Industries on Wednesday,show sales of passenger vehicles dropped by 16.7 per cent and SUVs by 5.4 per cent.
"There is no doubt it is a very tough market at the moment,"FCAI chief executive Tony Weber said.
Despite the fall,nominal GDP - which feeds directly into the budget - was above expectations with the surge in key commodities set to feed extra cash to the government bottom line. The boost may be short-lived with iron ore prices down sharply since the June quarter.
Amid a bleak international outlook due to the ongoing US-China trade war,mining and international trade were one of the few positives for the economy.
Mining added 0.3 percentage points to the overall 0.5 per cent quarterly result with other support coming from the health and public sector. The manufacturing,construction and wholesale trade sectors cut growth.
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The figures highlight the risk of any further deterioration in the global economy with domestic household consumption creeping along by 0.2 per cent due to persistently low wage growth.
The economy would have struggled to stay out of recession without historically high levels of immigration,with economic growth per person - gross domestic product per capita - negative over the past 12 months,the worst performance since 2008-2009.
Ernst and Young chief economist Jo Masters said while the national accounts show an economy still expanding,the pace of growth is slowing and the economy has"lost significant momentum"in the past year.
"Moreover,the growth base is narrow,with growth being driven by net exports and public spending. Private consumption added a little to growth,and private investment and residential construction weighed on activity,"she said.
BIS Oxford Economics chief economist Sarah Hunter said growth was likely to"remain relatively subdued until the early 2020s"but she expected the June quarter to be the trough for the year ahead.
The market expects the Reserve Bank to cut official interest rates again before the end of the year to a new record low of 0.75 per cent.