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Australia’s First-Quarter GDP Up 0.2% as Per Capita Output Declines

Extreme weather events dented demand alongside a sharp fall in government spending, heightening pressure on the RBA to deliver another rate cut

Residential properties are seen near the Sydney Harbour Bridge in Sydney, Australia, March 12, 2025. REUTERS/Hollie Adams/File Photo
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People walk outside a shopping mall in the Sydney Central Business District, in Sydney, Australia, May 14, 2024. REUTERS/Jaimi Joy/File Photo

Overview

  • GDP rose 0.2% in the three months to March, undershooting forecasts of around 0.4% growth and marking a notable slowdown from the previous quarter’s 0.6% gain
  • GDP per capita fell by 0.2%, potentially returning Australia to a per capita recession after a brief uptick in the December quarter
  • Public sector outlays recorded their largest drag on GDP since the September quarter of 2017 as state and federal infrastructure projects tapered off
  • Severe weather events, including Cyclone Alfred and Queensland flooding, cut into mining, tourism and export activity while households raised their savings ratio to 5.2%, the highest level since mid-2022
  • Financial markets now price an 80% chance of an RBA rate cut in July as domestic momentum softens and the OECD downgrades global growth forecasts to 2.9%