Treasurer Josh Frydenberg has declared Australia is in recession after almost 29 years of economic growth.

The treasurer announced Australia’s good run has ended with a March quarter contraction.

But Mr Frydenberg says Australia’s economy has been resilient compared with other countries.

The economy contracted 0.3 per cent in the March quarter, bringing the annual growth rate down to 1.4 per cent. Much of the hit is due to ongoing COVID-19 shutdowns.

“Clearly, with this once-in-a-century pandemic, the impact on the economy has been very severe, the impact in the June quarter will be even more severe,” Mr Frydenberg warned.

However, he said the nation has avoided Treasury's worst-case scenario of the recession, self-imposed to avoid a massive health crisis.

“Treasury were contemplating a fall in GDP of more than 20 per cent in the June quarter. This was the economists' version of Armageddon,” he said.

Australia’s expected 10 per cent fall in GDP is considerably better than estimates for countries such as the United Kingdom, which faces a 30 per cent plunge for June, and the US, expected to fall 20 per cent in the June quarter.

Mr Frydenberg and finance Minister Mathias Cormann say they will provide a detailed economic update on July 23, including expected changes to the $70 billion JobKeeper program following a review.

After two quarters of negative growth - a technical recession is now underway. It is the first time the economy has been in such a state since 1991.

Household consumption (which makes up about 60 per cent of GDP) dropped 1.1 per cent in the quarter, the worst in 34 years, and is expected to be the central focus for the government as it chases a rebound in the September quarter.

“Consumption will pick up as the restrictions are eased, and that is really important to understand,” Mr Frydenberg said.

“We have had nine consecutive weeks of consumer confidence rising, making up 95 per cent of those losses that we saw in March.

“With restrictions easing, we are seeing some encouraging signs across the economy. I think we will see consumption come back in accordance with the improvements we've seen in consumer confidence.”

There was a 2.4 per cent fall in services for the March quarter, while spending on transport services, hotels, cafes and restaurants experienced their largest falls on record.

Economists say they are seeing signs of recovery.

Commonwealth Bank economist Gareth Aird said “we now expect a faster pickup in GDP over the September quarter” despite the recent contraction.

ANZ economist David Plank said: “The better news on the health outcomes and earlier relaxation of restrictions also suggest that the drop [in June quarter] may not be as deep as earlier feared”.

“The recovery is unlikely to be V-shaped and further stimulus will likely be required to support growth over the next year or so.”

Shadow Treasurer Jim Chalmers warned the government must maintain its fiscal support, not withdraw it by tapering the JobKeeper program.

“What [the Treasurer] fails to recognise is that Australians are headed for another cliff in September when this support that's in the economy is withdrawn suddenly by the government,” Dr Chalmers said.

“Having introduced the support for the economy too narrowly and too slowly, Australians can't afford the government to withdraw that support too quickly or too bluntly.

“While the pandemic came without warning, long-standing weakness in the economy did not. Even before the virus, even before the bushfires, we had issues with weak growth, stagnant wages, weak business investment and productivity.”

Government expenditure rose 1.8 per cent in the quarter and is up 6.2 per cent over the year, while on the income side of the ledger, compensation of employees rose 0.5 per cent.

ABS payroll data shows as many as 950,000 jobs have been lost since mid-March.