Australia posts second-quarter growth of 2.1%, beating expectations — SkimNews
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- Australia's GDP grew 2.1% year-on-year in Q2, beating the 1.8% consensus of Reuters-polled economists and cooling from 2.5% in Q1
- Quarter-on-quarter GDP rose 0.4%, slightly above the 0.3% expected, with the ABS attributing growth to private demand and mining exports
- Household spending rose just 0.4%, with consumers cutting fuel purchases — blamed on elevated prices linked to the Middle East conflict — and trimming domestic and international travel
- The Reserve Bank of Australia is now seen with room to continue policy tightening, after some board members at its last meeting argued for additional hikes citing inflation still too high
- July inflation printed at 3.5%, above the 3.3% forecast, while the RBA projects a gradual decline back to the midpoint of its 2%-3% target range by late 2027
Why it matters: The RBA is gaining the very thing it said it wanted — a growth backdrop that can absorb more rate hikes — but with July inflation at 3.5% and the RBA itself not seeing a return to target until late 2027, households already cutting fuel and travel signal the squeeze is biting consumers long before it shows up in headline GDP.
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