The annual rise in gross domestic product, included in the Australian Bureau of Statistics' quarterly national accounts release on Wednesday, was above the expectations of economists and the Reserve Bank of Australia.
The central bank had forecast the economy to grow by 1.6 per cent in the 12 months to June.
The annual economic growth rate is up from the 1.3 per cent pace recorded in March.
ABS head of national accounts Tom Lay said the previous quarter was impacted by weather events.
Domestic final demand was the main driver of growth, led by household and government spending, while public investment was the largest detractor from growth.
"End of financial year sales and new product releases contributed to rises in discretionary spending on goods including furnishings and household equipment, motor vehicles and recreation and culture goods," Mr Lay said.
On a quarterly basis, the nation's economy grew by 0.6 per cent.
Australia avoided dropping back into a per capita recession.
GDP growth per capita was up 0.2 per cent per person, after a drop of 0.2 per cent on a per capita basis the previous quarter.
It's only the second quarter out of the past 10 that each Australian has seen growth in per capita GDP growth - a crude measure of household living standards, because it accounts for growth in the size of the population.
The quarterly economic pulse check comes after the RBA cut interest rates for a third time this year in August, which is expected to boost growth as borrowers gain greater purchasing power.
Minutes from the meeting revealed the central bank's board expected the recovery in GDP growth to be more gradual than previously forecast, amid more subdued public demand.
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