Australian Economy Grew 0.2 Per Cent In March Quarter

Australian gross domestic product (GDP) rose 0.2 per cent in the March quarter 2025 and 1.3 per cent compared to the March quarter 2024 (seasonally adjusted, chain volume measure), according to figures released today by the Australian Bureau of Statistics (ABS).

Katherine Keenan, ABS head of national accounts, said: 'Economic growth was soft in the March quarter. Public spending recorded the largest detraction from growth since the September quarter 2017. Extreme weather events reduced domestic final demand and exports. Weather impacts were particularly evident in mining, tourism and shipping'

GDP per capita fell 0.2 per cent this quarter, following a 0.1 per cent rise in the December 2024 quarter.

There was no growth in Government final consumption expenditure in the March quarter.

State and local governments spent less on social benefits to households for energy bill relief. This was offset by more Commonwealth government spending on defence. Commonwealth spending on social benefits to households remained low.

Household spending was up 0.4 per cent in the March quarter following a revised 0.7 per cent rise in the December quarter.

'Growth was relatively slow across most household spending categories following stronger than usual spending during the December quarter's retail sales events,' Ms Keenan said.

Spending on essentials like food and rent continued to be among the highest contributors to household spending growth. Households spent more on electricity, gas and other fuels, in part due to warmer than average weather during the quarter. The decline in electricity rebates available to households during the quarter also contributed to the rise in spending by households. The electricity rebates are treated as a shift from household to government spending in the national accounts. Discretionary spending on recreation and culture also contributed to the growth this quarter.

Private investment rose 0.7 per cent in the March quarter led by investment in dwellings, new buildings and new engineering construction.

Investment in both houses and alterations and additions grew this quarter, in line with recent increases in approvals.

Non-dwelling construction also rose in the March quarter, with investment in mining and manufacturing projects driving growth. Investment in electricity generation and distribution projects continued. There was an offsetting drop in machinery and equipment investment.

Public investment fell 2.0 per cent.

Investment by public corporations drove the fall this quarter following record levels of investment in the December quarter. Energy, telecommunications, rail and road project completions and delays drove the decline.

Commonwealth investment rose with more spending on defence.

Net trade detracted 0.1 per cent from growth in the March quarter.

Exports of goods detracted from growth. Coal and LNG exports were heavily impacted by severe weather disruptions to production and shipping.

Exports of travel services also detracted from growth with a smaller than average rise in the number of international students in Australia during the quarter and reduced average spending of students.

Imports of goods also fell, driven by a range of capital goods.

The household saving to income ratio rose to 5.2 per cent in the March quarter following a rise to 3.9 per cent in the December quarter. Gross disposable income rose 2.4 per cent, outpacing a rise in nominal household spending of 1.0 per cent.

Similarly to previous quarters, the rise in gross disposable income was driven by growth in compensation of employees (+1.5 per cent). This was partly offset by more income tax payable, up 1.8 per cent.

'The 1.3 percentage point rise in the household savings ratio this quarter included higher income support from government and insurance claims linked to severe weather events in Queensland,' Ms Keenan said.

'There was also a small rise in small business income, while mortgage interest payments dropped following the Reserve Bank of Australia cash rate cut in February 2025.'