Quarterly GDP rose 0.3%, short of forecasts for 0.5%, signaling a notably slower growth trajectory.

Australia’s economy grew by 0.3% in the March quarter, yielding 2.5% year-on-year growth, a slight slowdown from late-2025’s pace.

Analysts expect energy-crisis effects to peak mid-to-late 2026, urging government planning to shield the economy.

Some warn of stagflation risks as rising imports and other factors could slow annual GDP growth below 2% and keep inflation elevated, though June rate hikes were not widely anticipated.

Growth was tempered by weak government consumption, subdued household spending, and weather disruptions to mining and exports.

Business investment was the bright spot, up about 6% as data-centre expansion in NSW and Victoria, plus machinery spending, drove the surge—though much of the machinery was imported.

Markets priced in higher yields and a modest equity lift, with the 10-year yield around 4.90% and the Australian dollar near 0.7176 USD.

Exports fell 1.1% amid weaker commodity demand and mining disruptions, while imports rose, contributing to a 0.8 percentage-point drag on GDP from net trade.

The RBA has signaled a cautious stance, with growth expected to slow toward the end of the year as inflation pressures and private demand evolve.

Datacentre investment remains the standout short-term driver, but broader private-sector activity shows limited diversification beyond that sector.

Household spending edged up 0.5% in the quarter, with essentials up 0.8% and discretionary spending up only 0.1%, amid higher rates and fuel costs.

A widening trade deficit offset much of investment gains, contributing to the softer overall picture.