Australian GDP Surprises

Australia's economy grew by 0.4% quarter-on-quarter in the second quarter of 2026, up from 0.3% in the previous period and exceeding market forecasts of 0.3%. The growth rate in the preceding first quarter had marked the slowest pace in a year.

On an annual basis, Australia's gross domestic product grew by 2.1%. While this figure represents a slowdown from the 2.5% recorded in the first quarter—marking the lowest growth in three quarters—it remains stronger than the market consensus of 1.8%.

Growth was underpinned by household consumption, which rose by 0.4% for the second consecutive quarter. Government spending also rebounded by 0.6% following a 0.5% decline, while net trade contributed 0.1 percentage points, driven by an increase in mining exports.

Conversely, private investment fell by 0.5% due to weaker spending on machinery. Inventories shaved 0.1 percentage points off growth—reflecting a drop in coal export stocks and cyclone-related delays—while the household savings ratio rose to 6.5%.

Growth exceeding forecasts could support the Australian dollar and reduce the urgency for the RBA to loosen policy. However, the slowdown in annual growth suggests the economy is not overheating, meaning the AUD's future direction remains dependent on inflation data and RBA policy signals.