Australia's economic growth momentum weakened in the first quarter of 2026, with GDP rising by just 0.3% quarter-on-quarter, according to UOB economist Lee Sue Ann. This marks a notable slowdown from the revised 0.9% quarter-on-quarter expansion in the fourth quarter of 2025 (previously reported as 0.8%) [1]. The deceleration was attributed to modest household and public sector expenditure, as well as cyclone disruptions that impacted mining and export activities [1].
The latest GDP data underscore a loss of growth momentum at the start of the year, with domestic demand turning more uneven and external conditions proving less supportive [1]. External trade was identified as a significant drag on growth, while a pullback in public spending and weather-related supply disruptions highlighted downside risks to near-term activity [1].
Looking ahead, UOB expects further slowing as restrictive policy continues to weigh on households. While external demand, particularly for commodities, may provide some support, domestic demand is anticipated to remain the main drag on growth [1].
CONCLUSION
Australia's Q1 2026 GDP figures reveal a clear slowdown in growth, driven by weak domestic demand, reduced public spending, and cyclone-related disruptions. The outlook remains cautious, with further deceleration expected as restrictive policies persist and domestic demand stays subdued.