The Australian economy grew by 0.3% quarter-on-quarter in Q1 2026, undershooting market expectations of a 0.5% rise and decelerating from a 0.9% increase in the previous quarter. This was the weakest pace of expansion in a year, as the economy was weighed down by soft household and government spending, weather-related disruptions to mining, and weaker external demand.
Net exports shaved 0.8 percentage points off quarterly growth, with exports declining 1.1% amid reduced coal and iron ore shipments, while imports rose 2.1%. By contrast, domestic demand remained the main engine of growth, contributing 1.0 percentage point to GDP. This was driven primarily by private investment (adding 0.7 percentage points) and household consumption (adding 0.3 percentage points).
Investment in machinery and equipment jumped 16.3%, supported by strong spending on data centres, while public investment increased 0.9% on the back of higher defence and infrastructure expenditure. Government consumption edged down 0.2% following the expiry of temporary energy bill relief measures. On an annual basis, GDP growth eased slightly to 2.5% from 2.6% in Q4.
