Australia Q1 GDP Growth Softer Than Expected

The Australian economy expanded 0.3% quarter-on-quarter in Q1 2026, below expectations of a 0.5% increase and slowing from a 0.9% expansion in Q4. This marked the weakest economic growth in a year, as subdued household and government spending, adverse weather disruptions to mining activity, and weaker external demand weighed on the economy. Net trade subtracted 0.8 percentage points from growth, with exports falling 1.1% amid lower coal and iron ore shipments and imports rising 2.1%. Meanwhile, domestic demand contributed 1.0 percentage point to GDP growth, driven by private investment (0.7 pp) and, to a lesser extent, household consumption (0.3 pp). Machinery and equipment investment surged 16.3%, prompted by spending on data centers, while public investment rose 0.9% on higher defense and infrastructure outlays. Government consumption fell 0.2% following the expiry of energy bill relief measures. The annual GDP growth stood at 2.5%, below forecasts of 2.7%.

The Australian economy expanded 0.8% qoq in Q4 2025, accelerating from an upwardly revised 0.5% growth in Q3 and topping market estimates of 0.6%. It was the 17th straight quarter of growth, driven by firm domestic demand across private and public sectors. Private demand supported growth through household consumption (0.3% vs 0.5% in Q3, linked to discretionary spending amid Black Friday events) and private investment (0.7% vs 3.2%, with elevated spending on data centres and aircraft). Public demand contributed through government spending (0.9% vs 1.1%) and investment (0.9% vs 3.0%, owing to transport infrastructure projects and higher defence outlays). Inventories added 0.4ppts as firms rebuilt stocks through production and imports. Net trade weighed on growth, with exports (1.4%) rising less than imports (1.8%). The household savings ratio hit its highest since Q3 2022 (6.9% vs 6.1%). Annually, GDP grew 2.6%, above forecasts of 2.2% and the fastest increase in near three years.

The Australian economy expanded 0.4% qoq in Q3 2025, following an upwardly revised Q2 reading and market estimates of 0.7% while marking the 16th consecutive quarter of growth. Household consumption slowed sharply (0.5% vs 0.9% in Q2), as discretionary spending cooled after a strong Easter-related boost in the prior quarter. Meantime, government spending growth was little changed (0.8% vs 0.9%). Net trade was a drag, with exports (1.0% vs 2.3%) rising less than imports (1.5% vs 2.3%); while inventories subtracted 0.5ppts. In contrast, private investment surged (2.9% vs 0.2%), contributing 0.5ppts and marking its fastest pace since Q1 2021, driven by stronger machinery and equipment spending. Public investment also rebounded (3.0% -3.5%) on the back of renewable energy and water, telecommunications and rail transport projects. The household savings ratio increased (6.4% vs 6.0%). Annually, GDP grew 2.1%, slightly below forecasts of 2.2% and following a 2.0% rise in Q2.