Australia’s economy grew modestly over the March quarter as exports fell and households remained cautious amid higher costs.
Australian economic growth slowed in the March quarter, with gross domestic product (GDP) rising 0.3 per cent and 2.5 per cent over the year, according to new data from the Australian Bureau of Statistics (ABS).
This was down from the 0.8 per cent growth recorded over the December quarter 2025.
The result reflected subdued household and government spending, alongside disruptions to mining and export activity caused by severe weather events.
ABS head of National Accounts Grace Kim said: “Economic growth slowed in the March quarter, with modest household and public sector expenditure as well as cyclone disruptions to mining and export activities.”
Household spending increased 0.5 per cent during the quarter, supported by a sharp rise in spending on electricity, gas and other fuels, which climbed 11.7 per cent following the end of government rebates and higher out-of-pocket costs for consumers.
Spending on essential goods and services rose 0.8 per cent, while discretionary spending increased just 0.1 per cent.
“Rising interest rates and significantly higher fuel costs in the March month likely created an environment for more cautious consumer behaviour. This resulted in reduced spending across a range of household expenditure categories,” Kim added.
The ABS noted the household spending figures predated the halving of the fuel excise on 1 April.
Government final consumption expenditure fell 0.2 per cent, marking its weakest quarterly result since the September quarter of 2022. Commonwealth spending eased following elevated defence expenditure in recent quarters, while state and local government spending declined 0.8 per cent after electricity rebate payments ended.
Weather-related disruptions weighed on several export-focused industries during the quarter. Mining production fell 1.5 per cent and transport, postal and warehousing activity declined 1.3 per cent.
Exports dropped 1.1 per cent, the largest quarterly decline in two years, driven by falls in coal exports of 6.8 per cent and mineral ores exports of 1.3 per cent. Imports, meanwhile, rose 2.1 per cent, supported by a 6.3 per cent increase in capital goods imports.
Overall, net trade detracted 0.8 percentage points from GDP growth.
Business investment provided a bright spot, rising 6.0 per cent over the quarter. The increase was driven by a 16.3 per cent surge in machinery and equipment investment.
“M&E investment recorded the largest rise in 30 years with the expansion of data centres in New South Wales and Victoria during the quarter. The contribution of investment to GDP growth was moderated as most of this equipment was imported,” Kim added.
The household saving-to-income ratio fell to 6.2 per cent from 7.0 per cent in the December quarter, as household spending in nominal terms grew faster than disposable income.
Disposable income was supported by a 1.2 per cent increase in compensation of employees, although higher income tax and interest payments weighed on overall income growth.
