Australian consumers dipped into their savings to help the economy grow by 3.0 per cent last year, but they may not be able to sustain their free-spending habits in 2016.
A surprisingly strong 0.6 per cent jump in economic growth during the final three months of 2015 helped deliver the much better-than-expected result for 2015.
Growth for the September quarter was also revised upwards to 1.1 per cent from 0.9 per cent, the Australian Bureau of Statistics data showed.
The Australian dollar jumped almost two thirds of a US cent to 72.24 US cents in response, with several economists saying the data suggested that interest rates would remain on hold for 2016.
CommSec chief economist Craig James said it was the country's fastest economic expansion in two years, and also above the 15 year average of 2.9 per cent.
"Australia now ranks alongside Spain at the top of the leader-board when it comes to growth across advanced economies," he said.
Consumers were the main driver of growth, with household consumption expenditure rising 2.9 per cent annually.
Households spent more last year even though their wages grew by just 2.2 per cent, the slowest annual rate on record.
Commonwealth Bank economist Gareth Aird said confident consumers dipped into their savings to fuel spending.
The household savings rate fall to 7.8 per cent, the lowest level since before the GFC in 2008.
"The material decline in the savings rate suggests that consumers are loosing their purse strings and the wealth effect is trickling down to spending decisions," Mr Aird said.
ANZ economists said the accelerating household spending was vital for the non-mining economy to gain traction, but they were cautious about the use of savings to fund consumption.
"There is still a question mark over the sustainability of this spending recovery," they said.
Mr James said it would be interesting to see if the figures, along with low inflation and low interest rates could provide another kick to the economy in 2016.
"A further lift in confidence and the translation through to consumer spending will be keys to driving growth over the coming year," he said.
But AMP chief economist Shane Oliver was cautious about falling commodity prices, household reluctance to take on more debt, subdued confidence and declining building approvals, signalling housing construction had peaked.
He said combined effect of those factors would drag growth down to about 2.5 per cent this year.
And while most economists believe last year's GDP figure would diminish the Reserve Bank of Australia's easing bias towards interest rates, Dr Oliver said continuing low inflation could still cause them to act.
"We continue to expect the RBA to cut the cash rate again in the months ahead," he said.
"However, with growth exceeding expectations last year and the job market holding up well it's now a close call."
HSBC economists Paul Bloxham and Daniel Smith also noted that business conditions and jobs growth had pulled back in early 2016.
They said the RBA was also trying to determine if recent global economic uncertainty and market volatility weighed on domestic demand and unemployment.
"We see another RBA cut this year as more likely than not," the HSBC economists said.
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