Australia Private consumption

Economic growth rises in the second quarter of 2026

GDP reading: Australia's GDP grew 0.4% on a seasonally adjusted quarter-on-quarter basis in Q2, following a 0.3% expansion in the prior quarter and slightly above market expectations. Private spending—particularly on cars—and mining exports supported the economy. These factors were offset by lower fixed investment and an inventory drawdown as firms ran down stocks of coal that built up after Q1’s cyclones.

Drivers: Compared to the prior period's data, figures in Q2 improved for government consumption (+0.6% on a seasonally adjusted quarter-on-quarter basis vs -0.5% in Q1) and exports of goods and services (+0.8% vs -1.1% in Q1). In contrast, readings softened for fixed investment (-0.3% vs +3.1% in Q1) and imports of goods and services (+0.5% vs +2.0% in Q1). Finally, the variation in private consumption was the same as in the prior quarter (+0.4% in Q2 and Q1). In annual terms, the economy expanded 2.1% in Q2, following a 2.5% expansion in the previous quarter.

Panelist insight: Goldman Sachs analysts said: “The data suggest: (1) the consumer remained resilient in the face of three rate hikes and an oil price shock; (2) the overall pace of growth is a little faster than the RBA expected, and a touch above the RBA's estimate of potential (2%); (3) some key measures of wage growth remain elevated.”  On the outlook, United Overseas Bank’s Lee Sue Ann said: “Looking ahead, we expect growth to remain moderate over the remainder of 2026 as the cumulative effects of tighter monetary policy continue to weigh on household spending and business activity. While higher borrowing costs and elevated living expenses are likely to constrain discretionary consumption, household incomes continue to be supported by wage growth. Business investment should remain underpinned by structural spending in areas such as data centres, digital infrastructure and energy-related projects, while external demand for Australian commodities could provide additional support.”

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