Economic growth rises in the fourth quarter of 2025

GDP reading: Australia's GDP increased 0.8% on a seasonally adjusted quarter-on-quarter basis in Q4, following 0.5% growth in the previous quarter and above market expectations. That said, the acceleration was solely due to an inventory build-up, as key GDP components lost steam.

Drivers: Compared with the prior period's data, readings in Q4 softened for private consumption (+0.3% vs +0.5% in Q3), government consumption (+0.9% vs +1.1% in Q3), fixed investment (+0.7% vs +3.2% in Q3) and imports of goods and services (+1.8% vs +2.0% in Q3). Finally, the variation in exports of goods and services was the same as in the prior quarter (+1.4% in Q4 and Q3).

Panelist insight: On the outlook, EIU analysts said: “The fourth-quarter data support our existing forecast for growth in 2026, which is broadly a story of strengthening private-sector demand that is generating further economic growth similar to that seen in October-December 2025. We believe that the RBA will keep its policy interest rate on hold in March.”

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