Treasurer Jim Chalmers says the latest National Accounts are a “robust result” in light of global circumstances. Photo: Michelle Kroll.
Australia’s economy grew by 0.4 per cent in the three months to June and 2.1 per cent compared to June quarter 2025, which means it is not slowing as quickly as economists, including from the Reserve Bank of Australia, had predicted.
Forecasts were that the economy would grow by 0.3 per cent in the quarter and only 1.9 per cent in the year to June.
National accounts released on Wednesday (2 September) from the Australian Bureau of Statistics (ABS) show the three-monthly growth rate in real GDP rose from 0.3 per cent in the March quarter.
Household consumption rose 0.4 per cent in the June quarter with subdued spending across most categories.
ABS head of national accounts Grace Kim said the Middle East conflict influenced spending behaviour with falls in fuel consumption in response to elevated prices and reduced domestic and international travel.
The purchase of vehicles rose by 10.3 per cent, however, as Australians continue the transition to electric vehicles.
“Economic growth remained subdued in the June quarter as households continued to behave cautiously,” Ms Kim said.
“While increased spending and business investment occurred in pockets of the economy, imports supported much of the growth, moderating its contribution to overall GDP growth.
“The rise in electric vehicle purchases may have reflected households taking a longer-term approach to cost of living pressures, with some choosing EVs to help reduce ongoing expenses.”
Treasurer Jim Chalmers described the latest figures as a “robust result” but with the impacts of the Middle East war still evident.
“This is a robust result in really challenging international circumstances. The Australian economy is robust, it is resilient in the face of global uncertainty and conflict, and that’s the main takeout from these national accounts,” he said.
“People are still under pressure, but we can see in these national accounts that incomes are growing, housing investment picked up, there’s a solid pipeline of business investment and the private economy is driving the growth.”
Private business investment declined 0.5 per cent in the quarter, but was 10.4 per cent higher than June quarter 2025.
Investment in machinery and equipment for data centre fit-outs fell following a substantial rise in the March quarter, although investment in data centres remains at elevated levels.
Increased purchases of planes and industrial transport equipment partly offset the quarterly fall, the ABS stated, and imports of goods rose 2.4 per cent driven by cars and planes.
Imports of services fell 4.9 per cent as the Middle East conflict continued to disrupt Australians’ international travel plans.
“The number of Australians travelling overseas for the northern hemisphere summer fell for the first time since the COVID-19 pandemic, significantly reducing international travel expenditure,” Ms Kim said.
Exports rose 0.8 per cent, driven by a higher production of coal following weather disruptions in the March quarter.
The rise in exports outpaced the rise in imports (up 0.5 percent) and net trade contributed 0.1 percentage points to GDP growth.
Compensation of employees increased by 1.5 per cent, reflecting continued competition for skilled labour, increased wages, as well as bonuses and redundancies paid in the quarter.
And household saving to income ratio remained stable, up from 6.4 to 6.5 per cent.
On an annual basis (financial year), GDP rose 2.4 per cent, while GDP per capita increased by 0.8 per cent.
“Annual growth outpaced the previous two years with stronger growth from service industries which account for over 70 per cent of economic activity in the Australian economy,” Ms Kim said.
Shadow treasurer Tim Wilson said the data showed the Federal Government’s agenda was keeping the brakes on the Australian economy.
“Growth has been outstripped by the Albanese active inflation agenda because the government cannot live within its means, leaving Australians paying higher interest rates and supermarket prices,” he said.
“Because they can’t kick their spending addiction or live within their means, the Prime Minister and Treasurer are playing a game of interest rate and recession chicken with the Reserve Bank.
“While the Treasurer is fist bumping the air, small businesses are going to the wall, real wages are going backward with household budgets.”
The Australian Chamber of Commerce and Industry said the figures reinforced the “urgent need” for governments to deliver on promises to lift productivity and business investment.
“Whatever small upside there is in today’s GDP uptick is overshadowed by an economy running up against its capacity constraints, adding pressure on interest rates. Australia is hitting its economic speed limit, in second gear,” chief executive officer Andrew McKellar said.
