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Australian GDP Q4 Preview: Trend growth restored, inflation risks remain

Economy posts strong finish to 2025 Q4 GDP f/c: 0.8%qtr, 2.3%yr

Read full report 'Australian GDP Q4 preview: Trend growth restored, inflation risks remain ' (PDF 438KB)

Australia’s recovery continued over the final quarter of 2025 with the economy expanding an estimated 0.8%qtr to be up 2.3%yr in year-ended terms. The out-performance in the quarter was driven by an acceleration in consumer spending, with some support from businesses and construction.  

Abstracting from the volatility, we think the economy is currently growing around its long-run potential, with the handover in the drivers of growth from public to private demand now largely complete. 

The key question is whether this near-term growth profile is consistent with inflation returning sustainably to target. 

While productivity growth is expected to come in at around 1.0%yr, the increase in earnings per hour is likely to see nominal unit labour costs (ULC) still rising at a brisk 1.2%qtr, with growth accelerating through the second half of 2025 across both the economy and the market sector. This is likely to keep the RBA alert to upside inflation risks. 

 Click on above PDF link for full report

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