Australia has entered its first recession for 29 years after the economy went backwards by 0.3% in the March quarter, with the impact of bushfires and the coronavirus ending the nation’s extraordinary, uninterrupted run of economic growth.

The treasurer, Josh Frydenberg, told reporters a recession was inevitable after the Australian Bureau of Statistics released national accounts showing gross domestic product fell 0.3% in the quarter. The economy grew only 1.4% over the past 12 months, which is the weakest performance since the global financial crisis.

While Frydenberg said the contraction in Australia was less severe than many other countries battling the economic shock associated with the coronavirus pandemic, he warned people to brace for “difficult days ahead” because the June quarter results would be worse than the impact felt in March.

Despite being the first treasurer in nearly three decades to preside over a recession, Frydenberg insisted Australia had avoided “an economist’s version of Armageddon” during the pandemic because the lockdowns had successfully flattened the curve of Covid-19 infections, and the public health restrictions had been accompanied by significant income support.

Frydenberg said the government would provide its own comprehensive economic update in late July when it unveiled the results of the review of the wage subsidy jobkeeper – delaying its planned mini-budget by a month. The treasurer also hinted the government might either reduce the wage subsidy from a flat payment of $1,500, or provide differential rates depending on a worker’s income.

The latest national accounts document the economic impact of conjoined catastrophes – the summer bushfires, and the onset of the coronavirus pandemic. The ABS data shows household consumption fell 1.1% – the first fall since December 2008 – and the largest quarterly decline in 34 years.

While consumers increased their spending on goods – hoarding supplies in anticipation of a lockdown of all non-essential services – spending on services fell 2.4% with the introduction of social distancing restrictions and travel bans in February and March. Spending on transport services, hotels, cafes and restaurants fell off a cliff during the March quarter.

With consumption declining, the household saving-to-income ratio rose to 5.5%, up two points from the December quarter. Disposable incomes rose during the quarter, driven by a 6.2% increase in social assistance benefits, because the number of recipients increased as people lost their jobs in March, and new support packages were rolled out.

The ABS says household saving in Australia is now at the highest rate since September 2016. There was also a significant spike in insurance claims during the quarter because of properties lost during the bushfires and the freak hailstorm event in Canberra in January.

Dwelling investment fell 2.9% in the quarter and by more than 15% over the past 12 months. Business investment fell in all sectors apart from mining, where investment rose 3.6% in the quarter and 10.3% in the year.

The coronavirus shock created a 3.9% fall in imports of consumables, and services imports crashed by 13.6%. Goods exports were down 0.7% and services exports plunged by 12.8%, which was the impact of the travel ban impacts on education-related travel and tourism.

The postponement of elective surgeries, and consumers shying away from face-to-face visits with their GPs also triggered a 0.1% fall in spending on healthcare and social assistance.

But government spending was a plus for the economy. Government expenditure was up 1.8% in the quarter and 6.2% in the year, which is the impact of bushfire relief packages and the stimulus measures for Covid-19.

While Frydenberg was at pains to say the result could have been worse, Labor said the government needed to take responsibility for its record in economic management. The shadow treasurer, Jim Chalmers, said the economy was weak before the virus hit, with below-trend growth, stagnant wages and paltry business investment.

Chalmers told reporters Australia’s long run of economic growth was “created by Hawke and Keating … and it ends under Morrison and Frydenberg”.

“For too long, they skated on this undeserved reputation as good managers of the economy when the facts tell a very different story,” the shadow treasurer said.