SYDNEY (AFP) - Australia's economy expanded more than expected in the second quarter, data showed on Wednesday (Sept 1), thanks to a pick-up in domestic demand.

The growth eases concerns that the country could suffer a double-dip recession as it battles a fresh wave of Covid-19 infections.

However, there are fears it will suffer a contraction in the current period with its two biggest cities stuck in lockdown and the authorities struggling to contain the latest outbreak.

The Australian Bureau of Statistics reported the economy grew 0.7 per cent in April-June as household spending and government expenditure jumped.

Compared with the same period last year the economy soared 9.6 per cent owing to the very low base of comparison.

"Domestic demand drove growth of 0.7 per cent this quarter which saw continued growth across household spending, private investment and public sector expenditure," said the bureau's national accounts head Michael Smedes.

But the figures did not include the full impact of prolonged lockdowns in Sydney and Melbourne as well as other parts of the country that have more than half the 25 million population living under stay-at-home orders.

Australia suffered its first recession in nearly three decades last year, but recovered strongly towards the end as outbreaks were brought under control and virus curbs lifted.

The authorities have now agreed on a road map to reopen the country when it hits vaccination targets of 70 per cent and 80 per cent - likely later this year - which would boost the economy once more.

But disagreement between state government leaders over the approach could yet derail those efforts, with concerns that some could block the nationwide removal of restrictions.