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Australian GDP Q2: Growth expected to remain sluggish

Q2 GDP f/c: 0.3%qtr, 1.0%yr. The domestic demand impulse expected to be weak. Domestic demand: +0.2%qtr, 1.4%yr.

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The National Accounts are likely to show that the recent run of sub-par growth continued in the June quarter, when they are released next Wednesday.

Growth in domestic spending is expected to remain weak. Foreign demand for our goods and services is expected to contribute significantly to GDP growth in Q2.

Labour productivity is expected to grow by at least 1.0% in year-ended terms, suggesting that the supply side of the economy is expanding at its pre-pandemic average rate. 

We expect domestic demand to gradually improve. Cost-of-living support, tax cuts, moderating inflation and, eventually, lower interest rates will support consumer income and spending. That said, the pace of recovery is expected to be slow.

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