GDP – March Quarter
Australia’s economy grew by 0.3% in the March quarter, down from 0.9% in the December quarter, with annual growth at 2.5%. While the economy remained in expansion territory, the data confirms a marked loss of momentum, with growth increasingly dependent on a narrow surge in capital investment rather than broad-based activity.
The defining feature of the quarter was an exceptional boom in data centre investment, which effectively accounted for all GDP growth. Business investment rose around 6.5%, the strongest since the mining boom in 2012, driven by rapid expansion in digital infrastructure and energy transition projects. However, the gains were highly concentrated, import-heavy, and likely to have limited direct employment effects.
Household demand remained subdued. Consumption rose 0.5%, led by essentials, while discretionary spending was almost flat, reflecting ongoing pressure from higher interest rates, fuel costs, and weak real income growth. Public demand also softened, removing another source of support. Per capita GDP edged lower, and productivity also declined, underscoring weak underlying momentum and ongoing structural challenges.
The broader inflation backdrop remains sticky. Supply-chain pressures linked to prolonged tensions in the Middle East risk keeping energy and transport costs elevated, while the larger-than-expected minimum wage increase adds to domestic cost pressures. Together, these factors suggest inflation risks are not fully receding, even as growth slows.
The March quarter data all but confirms a rate hold at the RBA’s June board meeting. The economy is still expanding but increasingly reliant on a narrow data centre-driven investment boom, while consumption, trade, productivity, and public demand remain weak, raising the risk of a stagflation-like environment of slower growth alongside persistent inflation pressures.
Source: Australian Bureau of Statistics, Australian National Accounts: National Income, Expenditure and Product, March 2026.