Data released by the Australian Bureau of Statistics (ABS) showed that Australia's economy slowed its pace in the first quarter as business spending dropped amidst efforts by the government to pump prime the economy by constructing a new building in every school.

According to the ABS, the nation's $1 trillion economy rose 0.5 percent from the fourth quarter, when growth spiked 1.1 percent. Gross domestic product rose 2.7 percent from January to March, it was reported.

In the last quarter of 2008, the Australian economy contracted, as the global financial crisis hit economies across the world. But it has since rebounded and has continuously expanded because of the billions of dollars in government stimulus spending.

The ABS released the first quarter data one day after the Reserve Bank of Australia announced it would hold its policy interest at 4.5 percent after a series of rates hike. The RBA said the pause in key rate hikes was in response to the lingering European sovereign debt crisis.

Treasurer Wayne Swan said the decision of the government to invest money for the construction of new building to every school, augmented the fall in private sector spending in the first three months of this year.

Public investment grew 11.6 percent in the March quarter and 39.5 percent for the year. Private investment fell 2.4 percent in the quarter and lost 0.4 percent in the year through March.