Australia posts second-quarter growth of 2.1%, beating expectations — SkimNews
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- Australia's economy grew 2.1% year-on-year in Q2, exceeding the 1.8% forecast from a Reuters poll of economists, after 2.5% growth in the prior quarter
- Quarter-on-quarter GDP rose 0.4%, beating expectations of 0.3%, with the Australian Bureau of Statistics attributing the growth to private demand and mining exports
- Household spending rose just 0.4%, with the ABS noting cautious consumer behavior, reduced fuel consumption driven by Middle East conflict-related price increases, and cuts to domestic and international travel
- The Reserve Bank of Australia now has room to proceed with policy tightening to curb inflation, with some board members having already weighed the case for additional tightening at the last meeting
- July inflation came in at 3.5%, above the 3.3% forecast, with the RBA projecting a return to the midpoint of its 2%-3% target range only by late 2027
Why it matters: The RBA gains cover to continue tightening after Australia's GDP beat 1.8% forecasts at 2.1%, but with July inflation at 3.5% (above the 3.3% forecast) and a target-band return not expected until late 2027, the central bank faces a multi-year tightening path into a consumer already cutting fuel and travel.
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