The stimulus payments have helped lift consumer spending
The Australian economy has unexpectedly avoided falling into recession after its economy grew by 0.4% in the first three months of 2009.
Increased exports and consumer spending helped the economy to rebound from the 0.5% contraction recorded between October and December last year.
Australian Prime Minister Kevin Rudd said the country was now the only advanced economy not in recession.
An economy is said to be in recession after two straight quarters of decline.
To help avoid the country falling in recession, the Australian central bank cut interest rates to a 45-year low of 3.25% in February.
The government also introduced a number of multi-billion dollar stimulus packages, including increased infrastructure spending and cash handouts to most Australians since the end of last year to lift consumer spending.
Despite the economic growth in the first quarter of the year, Mr Rudd said Australia remained at risk of recession.
"We're not out of the woods yet, we've got a long way to go," he said.
Analysts agreed that the risk of recession remained as 2009 continues.
"We have technically avoided recession, but if you look at the details in the data it is not a pretty picture," said Australian-based JP Morgan economist Helen Kevans.
"We have imports falling off a cliff, which is a symptom of firms smashing investment and which is bad for our employment outlook."