Australia's GDP Grows at Best Rate Since 2023, Exceeds Forecasts in Q2

Sydney — Australia's economy expanded at its best rate since September 2023, surpassing estimates in the second quarter, official data showed on Tuesday.

Gross domestic product (GDP) increased 1.8 percent from a year earlier, higher than the 1.6 percent predicted in a Reuters survey and better than the 1.3 percent growth the previous quarter. GDP was up 0.6 percent on a quarterly basis, exceeding the 0.5 percent estimate.

The Australian Bureau of Statistics reported domestic demand as the primary mover, backed by government and household consumption. Public demand remained level, though, as a 0.2 percentage point decline in public investment was balanced by gains in government spending. Net trade contributed minimally, led by exports of mining commodities.

Experts warned that the growth may already have peaked for the year. "This could be a high watermark for growth in 2025," said Sean Langcake, Senior Macroeconomic Forecaster at Oxford Economics, adding that consumer confidence, business confidence, and labor market resilience are still weak.

The numbers follow the Reserve Bank of Australia's 25 basis point cut in interest rates in August to 3.6 percent and more upbeat assessment of global conditions. Nevertheless, the central bank trimmed its full-year growth estimate to 1.7 percent from 2.1 percent due to weaker public demand and lower productivity expectations.

Inflation fell to 2.1 percent in the second quarter, its lowest since March 2021, and is almost at the bottom of the RBA's target band of 2–3 percent. Consumer confidence has also risen, with a Westpac-Melbourne Institute survey indicating it was at its best level in over three years.