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Investing.com-- Australia’s economy grew less than expected in the first quarter of 2025, gross domestic product data showed on Wednesday, as weak local spending and sluggish exports weighed on growth.
GDP grew 1.3% year-on-year in the first quarter, data from the Australian Bureau of Statistics showed. The print was weaker than expectations of 1.5%, but remained steady at the 1.3% rise seen in the December quarter.
GDP grew 0.2% quarter-on-quarter, less than expectations of 0.4% and slowing from the 0.6% seen in the prior quarter.
Weak public spending was a major weight on growth, while adverse weather conditions– including cyclones and wildfires– also detracted from growth during the quarter. Weather impacts were particularly felt in the mining, tourism, and shipping sectors.
Government spending also remained largely flat, while household spending grew at a slower pace than the prior quarter.
Wednesday’s soft print was in part telegraphed by dismal current account and net exports contribution data released on Tuesday. Australian businesses also logged weaker gross operating profits during the quarter.
Australia’s commodity exports, while facing disruptions from adverse weather conditions, were also dented by a renewed trade war between the U.S. and China, which rank among its biggest export destinations.
A deescalation in the war in May could help bring a better second quarter for the Australian economy.
While Australian growth is still expected to pick up this year, the Reserve Bank of Australia warned during its May meeting that growth will likely increase at a slower pace, citing uncertainty over global trade.
Still, a softening economy gives the RBA more impetus to cut interest rates further, after it cut rates by a cumulative 50 basis points so far in 2025.