New data has prompted the ACT government to announce the economy has "turned the corner" and officially recovered from cuts to the federal public service and economic uncertainty.
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Data published by the Australian Bureau of Statistics on Wednesday found economic activity increased by 3.1 per cent during the June quarter, which came after a 1.8 percent increase in the March quarter.
According to the Bureau, the growth was driven by public sector spending that has been credited by business leaders as insulating the economy from federal budget cuts.
ACT Chief Minister Andrew Barr said the data showed the territory was leading the nation when it came to economic growth measured by state final demand.
Canberra Business Chamber chief executive Robyn Hendry agreed the economy had proved resilient in the past few years, despite remaining concerned about rising debt.
"There is other evidence to say this is true, including signs of increasing consumer confidence like retail figures," she said. "Clearly the market is telling us the worst is over."
Ms Hendry said the private sector had provided jobs to retrenched public servants although more time was needed to judge its ultimate success.
"Private sector investment is down although it does take a while for those investments to materialise and you are not going to get them coming through immediately," she said.
"Yes government policies are showing through, yes they have been keeping the economy strong, but we also need to see a sustained period of consumer confidence to see the results of private sector investment."
Shadow treasurer Brendan Smyth commended the business community for working through tough times and said the figures were a good result for the ACT.
But Mr Smyth said the Chief Minister could not claim credit for the increase as "he predicted state final demand growth of 1.5 percent in the last financial year – it's grown by four times that".
Mr Barr said the data justified the government's record funding in infrastructure including a capital works program of $2.8 billion over four years.
"Despite the Commonwealth government's cuts, we have kept the economy moving and unemployment low and we're doing this while maintaining the high level of service Canberrans deserve," he said.
Ms Hendry said the Canberra Business Chamber had supported the government's decision to increase public expenditure in the 2015-16 budget, despite ongoing concerns about debt.
"We are concerned and cautious about the deficit," she said. "We did support the expansion in spending because we didn't think the territory should be retracting at the same time as the federal government."
Nationally, the economy expanded at its slowest rate in four years in the second quarter of 2015 due to falling commodity prices, declining business investment and sluggish consumer spending.
According to the Bureau, the nation's gross domestic product grew 0.2 per cent in the three months to the end of June, compared with 0.9 per cent in the first quarter.Mr Barr said the economic performance was a contrast to 1996-97 when cuts to the public service had "a devastating impact on unemployment, business confidence and house prices in the territory".
"This time, a growing economy has meant the ACT Government can continue to deliver the services Canberrans depend on, and maintain our uniquely Canberra way of life," he said.
Ms Hendry agreed with the Chief Minister but said the nature of the Canberra workforce and a growing private sector were also to be credited.
"In 1996, we went in to recession and that hasn't happened this time and it is clear that the participation rate has remained high while the unemployment rate has barely moved," she said.
