Australia’s economy grew at a faster clip than expected in the second quarter, official data showed Wednesday, even as households stayed cautious and trimmed spending on fuel and travel amid elevated prices from the Middle East conflict.
Gross domestic product rose 2.1% year on year, according to the Australian Bureau of Statistics, beating the 1.8% forecast from economists polled by Reuters. That marked a slowdown from the prior quarter’s 2.5% annual expansion, but the quarter-on-quarter figure of 0.4% also came in slightly above the 0.3% expected.
The modest growth was underpinned by private demand and mining exports, the data showed. However, the ABS noted that household spending remained subdued, rising just 0.4% in the quarter.
Households stay cautious
Consumers continued to behave warily, the statistics bureau said. Spending on fuel fell as households responded to higher prices tied to the Middle East conflict, and they also cut back on both domestic and international travel.
The cautious consumer picture helps explain why the broader economy is expanding only gradually, even as the headline growth numbers come in ahead of forecasts.
RBA room to tighten
The stronger-than-expected GDP print gives the Reserve Bank of Australia more room to proceed with its policy tightening as it tries to bring inflation under control, according to analysts.
At its most recent meeting, some RBA board members had weighed the case for additional tightening, arguing that inflation was still too high.
Those concerns were underscored by July’s inflation reading, which came in at 3.5% against a 3.3% forecast. The RBA itself has projected that inflation will decline only gradually, returning to around the midpoint of its 2%-3% target range by late 2027.
Source: www.cnbc.com — https://www.cnbc.com/2026/09/02/australia-gdp-q2-middle-east-rba.html
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