Business leaders have used the weakest national accounts figures in almost 10 years to pressure the Morrison government to introduce growth-friendly reforms including an easing of red tape on resource projects, tax cuts, workplace reforms and allowances that would stimulate investment and consumer spending.
The Conservative Party supports those reforms and has urged Scott Morrison's government to act quickly.
The Australian reports, gross domestic product grew by just 0.4 per cent in the March quarter, translating to a 1.8 per cent annual rise, with government spending and exports countering weak consumer spending.
That rate of growth puts the economy well behind the Reserve Bank's forecast of 2.75 per cent growth this year and next, which was reaffirmed on Tuesday.
It is also below the 2.75 per cent growth forecast in the budget and the pre-election economic and fiscal outlook. But Josh Frydenberg noted that nominal GDP growth - which has a bigger bearing on the budget surplus forecast - was strong, at 1.4 per cent for the quarter and 4.9 per cent for the year.
"The economy continues to grow in the face of significant international and domestic headwinds," the Treasurer said. "However, growth is softer than it was at the same time last year."
Amid flat wage growth, falling houses prices in the biggest states, and the NSW and national elections, shoppers held their wallets close, with consumer spending up just 0.3 per cent - contributing 0.1 percentage points to the March quarter GDP, while the household savings rate again climbed higher.
A feared consumer strike was most pronounced in discretionary spending, with falls in furniture and household equipment linked to a 2.5 per cent fall in dwelling investment for the quarter.
There were also falls in recreation and culture, hotels, cafes and restaurants, and clothing and footwear, the Australian Bureau of Statistics said.
