Australian GDP: a preview bulletin

By Pat Bustamante Senior Economist, Westpac

Growth moderates Q1 GDP f/c: 0.5%qtr, 2.6%yr. Business investment surges 6.0%qtr and 10.3%yr.

Growth likely moderated in Q1 2026, with the economy expanding 0.5% in Q1, down from 0.8%qtr in Q4 2025. Significant headwinds from the conflict in the Middle East will only partly be reflected in this quarter’s Accounts. We expect these impacts to intensify in Q2 2026, with the possibility of a quarterly contraction which, if it were to occur, would be the first quarterly decline since the GFC (excluding COVID).
The big story in this quarter’s Accounts will instead be data centres. The Private capex survey showed investment in data centres almost doubled in Q1, with expectations pointing to a further acceleration in FY2027. This will see new business investment grow at its strongest rate since the mining investment boom of the 2000s. Some of this will be ‘leaked’ out via higher imports, but as we show it will still provide a significant support to activity in the Australian economy.
We are also likely to see labour productivity fall 0.3%qtr in Q1. This will concern the RBA but is not overly surprising given the temporary supply shock around energy and the productivity drag that typically comes during the initial stages of an investment surge (when resources are being put towards constructing projects that are not yet productive).

Click on above PDF link for full report

Related articles