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The long night of falling commodity prices and flagging growth might be drawing to a close.

The long night of falling commodity prices, flagging growth, and endless downward revisions to business investment forecasts might be drawing to a close in Australia, buoying expectations for the economic outlook.

The narrative that has dom­inated the resource-rich economy since 2011, when iron ore prices stretched upwards towards $US200 a tonne and then began to collapse, has been one of caution, with policymakers attempting (sometimes with fingers crossed) to land the economy softly.

The hit to national income that has come with the hefty retreat in commodity prices is now visible in a bulging budget deficit, and the slowest pace of wages growth since the last recession in the early 1990s.

Easing the economy down on to the runway has perhaps taken more interest rate cuts than expected, while also arguing against over-zealous budget cuts, but it just might be there.

Signs of strength are again visible as the economy transitions away from mining towards booming services exports, while the investment spree of 10 years ago now drives record exports of iron ore and liquefied natural gas.

GDP growth in the first quarter of 3.1 per cent on-year was the fastest in over three years, while the jobless rate has fallen to its lowest rate in more than two years.

The Westpac-Melbourne Institute Leading Index, a sometimes overlooked indicator of the economy, recorded its strongest reading in May since October last year.

The new rays of activity explain why the Reserve Bank hasn’t rushed into multiple interest rate cuts since lowering its cash rate in May, its first in a year.

Matthew Hassan, senior economist at Westpac, said the economy looked like it was finding its feet again after many years of fighting against tumbling prices for iron ore and coal.

“Most notably the drag from falling commodity prices, which has been a consistent feature over the last two years, has eased significantly,” he said. “While commodity prices are likely to remain weak in the near term, 2016 is expected to see an end to the strong underlying downtrend in prices that has dominated since 2011.”

The Reserve Bank also appears more upbeat about the economic outlook. The central bank said on Tuesday that falling mining investment that had weighed on the economy was now being offset by rising mining sector exports. The pace of growth in the first quarter outstripped the RBA’s expectations by a long way. It means the discussion around mining’s impact on the broader economy is now a far less bleak topic than it has been for many years.

The strong GDP results have come at a good time for the ruling-Liberal-National coalition ahead of the July 2 election. Still, Scott Morrison has acknowledged the economic recovery is still fragile.

Part of the continuing fragility lies with the lost income from commodities. Profits and incomes have been savaged.

Still, the phase of deep uncertainty seems to be lifting somewhat. The Commonwealth Bank estimates that the drop in mining investment from boom years earlier this century is more than 70 per cent complete, and its effect on slowing the economy will ease quickly in the coming years.

All the same, it might be premature to declare the night replaced by day.

Paul Brennan, chief economist at Citigroup also said Australia was not out of the woods yet with more weakness in the iron ore price likely over the second half of the year, and a pushing back of US interest rate increases likely to keep the Aussie dollar higher for longer.

Citi expects the iron ore price to end the year at closer to $US40 a tonne, compared with $US50 a tonne now. “While the worst is over (for commodity prices), the current ­period will give way to lower prices for coal and iron ore. That will weigh on terms of trade, so there is still going to be a drag on income,” Mr Brennan said.