Australia: Growth momentum weakens as demand cools – UOB

UOB economist Lee Sue Ann highlights that Australia’s GDP growth slowed to 0.3% q/q in 1Q26 as weak public spending, trade drag and cyclone disruptions offset strong business investment. She expects further slowing as restrictive policy weighs on households, with domestic demand remaining the main drag despite some commodity export support.

GDP slowdown underscores domestic fragility

"Australia’s GDP rose 0.3% q/q in 1Q26, slowing from the revised 0.9% q/q expansion recorded in 4Q25 (0.8% q/q previously), reflecting modest household and public sector expenditure as well as cyclone disruptions to mining and export activities."

"Overall, the latest GDP data point to a loss of growth momentum at the start of the year, with domestic demand turning more uneven and external conditions proving less supportive."

"At the same time, the pullback in public spending and weather-related supply disruptions highlight downside risks to near-term activity."

"While external demand, particularly for commodities, should provide some support, domestic demand is expected to remain the key drag on growth."

"External trade was a significant drag on growth."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)