Australia's economy managed only modest growth in the March quarter, as the pace of expansion slowed amid soft household consumption and a decline in government spending.
Gross domestic product grew by a seasonally adjusted 0.3% in the March quarter, matching the expansion posted a year earlier but decelerating from growth of 0.9% in the December 2025 quarter, Australian Bureau of Statistics data showed Wednesday.
The quarterly performance missed estimates from both BofA Securities and ANZ, which forecast sequential growth of 0.5%. First-quarter GDP rose 2.5% compared with a year earlier, also trailing estimates for 2.6% growth.
The result came as household consumption increased 0.5%, although discretionary spending was subdued as elevated borrowing costs and higher fuel costs likely made consumers more cautious across most categories. At the same time, government spending declined 0.2% as energy bill relief ended, driving reduced social benefits to households from state and local governments.
Investment in data centers was the top contributor to economic growth, but since most of the capital assets were imported, the impact on growth was moderated as net trade detracted 0.8 percentage points from GDP growth.
The Australian Bureau of Statistics also pointed to adverse weather conditions that obstructed mining production as another reason for the modest GDP growth figures. Mining production slid 1.5% as Cyclone Koji disrupted thermal and coking coal operations, and weather-related unplanned outages also hit oil and gas extraction.
The first-quarter data is not expected to capture any material spillovers from the conflict in the Middle East, with the resulting negative growth effects more likely to emerge in the second quarter, BofA Securities said in a note earlier this week.
Australia's central bank will have a close eye on the latest GDP figures heading into its next policy meeting later this month. The bank has already increased the official cash rate three times this year in its fight to control inflation.
