Australia 2Q GDP rises 0.6% q/q; est. 0.5%

Australia 2Q GDP rises 0.6% q/q; est. 0.5%

Australia's Gross Domestic Product (GDP) grew by 0.6% in the second quarter of 2025, according to data released by the Australian Bureau of Statistics (ABS) on Tuesday. This figure exceeded market expectations of a 0.5% increase, marking a modest recovery in the economy [1].

The growth was primarily driven by net exports, which contributed 0.1 percentage points to the quarter's GDP, outperforming analyst expectations of a flat contribution. This improvement was largely due to investors earning more from their overseas equities and a fall in the goods and services surplus, driven by strong imports of non-monetary gold and travel services [1].

However, government spending failed to contribute to economic growth in the second quarter, with the ABS estimating it made no contribution to the quarter's growth. This underwhelming performance highlights the need for more policy stimulus, as economists had expected a rebound from the first quarter [1].

Consumers played a significant role in driving the economy, with household spending picking up after a long period of decline. The Reserve Bank of Australia (RBA) has cut interest rates three times this year to 3.6% to combat cooling inflation, but the recovery in the economy has been tepid so far. The RBA expects the economy to grow just 1.7% by the year end, with swaps implying a less than 20% chance of another rate cut this month [1].

In summary, while Australia's 2Q GDP growth exceeded expectations, the lack of contribution from government spending and the tepid recovery in the economy underscore the need for further policy easing to sustain growth.

References:
[1] https://www.tradingview.com/news/reuters.com,2025:newsml_L1N3UP00Y:0-trade-adds-slightly-to-australia-s-q2-growth-but-government-spending-underwhelms/