Australia’s First-Quarter Economic Growth Misses Estimates on Severe Weather, Weak Demand Australia’s GDP expanded by 2.5% year-on-year in the first quarter, a slowdown from the previous quarter and below economists’ expectations, largely due to subdued household spending, reduced government consumption, and disruptions from severe weather impacting mining and exports. Despite a modest quarterly growth of 0.3%, driven partly by investment in data center machinery, the outlook is darkening due to global conflicts potentially increasing commodity prices and weighing on consumer demand. The Reserve Bank of Australia, which has already raised interest rates three times this year, anticipates further slowing economic growth to 1.3% by year-end.

• Australia’s GDP grew 2.5% year-on-year in Q1, slowing from 2.6% in the prior quarter and missing expectations.
• Quarter-on-quarter GDP growth was 0.3%, decelerating from 0.8% in the previous quarter.
• Factors contributing to the slowdown include subdued household spending, reduced government consumption, and severe weather impacting mining and exports.
• Investment in data center machinery and equipment was a partial driver of the modest growth.
• The Reserve Bank of Australia has raised interest rates three times this year, with the cash rate target at 4.35%, due to revived inflation pressure.
• Global conflicts, particularly in the Middle East, could increase commodity prices and negatively impact consumer demand.
• The RBA expects economic growth to slow to 1.3% by the end of the year.