As signs of a recession are speculated, the Australian Parliament is still sticking to its positive outlook that the economy can rebound from this slump.However, Australia's industry sectors are wary that the underlying weakness of the economy must be addressed immediately.

A day after the statistics bureau released the data for March pointing to a subdued growth, Treasury Secretary Martin Parkinson said at a Senate hearing that: "The underpinnings of the budget are still for a central forecast for very strong growth going on from here."

"It was marginally larger than what we had been anticipating," Dr Parkinson told a Senate estimates hearing in Canberra.

The loss of production amounting to $12 billion caused by the summer's natural disasters brought down the GDP by 1.2 percent and than the $9 billion Treasury had been expecting.

Industry sectors led by the AI Group said the contraction in the economy has showed the underlying weakness in the Australian economy that needs to be addressed.

Australian Industry Group Chief Executive Heather Ridout said in an emailed statement that the rising input costs, the deluge of cheaply-produced imports, and the pressure of the high dollar were just some of the factors that could have also hampered the manufacturing growth in the first quarter.

"The wider areas of concern for manufacturing were reflected in Ai Group's Performance of Manufacturing Index released today which points to the pressures on the sector from the high dollar driven by the mining boom; cheap imports; competition in export markets from low-cost producers and rising input costs including from energy prices," Ms Ridout said.

She noted that while domestic demand overall appears to be recovering some momentum, the manufacturing data in today's National Accounts - showing a fall of 2.4percent in the volume of production in the quarter and a fall of 3.1percent over the full year, indicates there was more influencing the overall result than natural disasters.