Gross domestic product for the first three months was down 1.2% from the previous quarter, compared with revised growth of 0.8% in that previous quarter, said the Australian Bureau of Statistics on June 1.
In seasonally adjusted terms, Mining (down 6.1%) contributed -0.6 percentage points, while Manufacturing (down 2.4%) and Agriculture (down 8.9%) both contributed 0.2 points to the decline in GDP.
This biggest quarterly contraction since 1991, while expected, comes as a blow for the minority government, increasingly depending on revenue from iron-ore and coal exports to China to help meet its key election pledge to restore a budget surplus by 2012.
To be sure, the country's terms of trade are the best in 140 years, as markets in Asia demand record quantities of Australian resources for steel making and producing energy. Flooding and a cyclone that knocked out mines in Queensland drove down coal exports by 27% in the quarter as open-cut coal mines filled with water and key rail lines were washed away.