Australia’s GDP posted a 0.2% q/q rise in 1Q25, decrease than consensus expectations for a 0.4% q/q print, and development tempo of 0.6% q/q in 4Q24. It was additionally weaker than the RBA’s Might Assertion on Financial Coverage forecast of 0.4%. From a 12 months earlier, the economic system expanded by 1.3% y/y, unchanged from 4Q24, but additionally beneath expectations of 1.5%, UOB Group’s economist Lee Sue Ann reviews.
RBA to additional ease its coverage fee
“GDP rose 0.2% q/q in 1Q25, decrease than consensus expectations for a 0.4% q/q achieve, and development tempo of 0.6% q/q in 4Q24. It was additionally weaker than the Reserve Financial institution of Australia (RBA)’s 0.4% forecast stipulated within the Might Assertion on Financial Coverage. From a 12 months earlier, the economic system expanded by 1.3% y/y, unchanged from 4Q24, but additionally beneath expectations of 1.5%.”
“Ongoing uncertainty in relation to the continued commerce conflict will doubtless have detrimental implications for consumption and enterprise funding in Australia. As such, our financial development forecast for Australia has been lowered barely to 1.8% in 2025 (from 1.9% beforehand).”
“We had penciled in an extra 50 bps of easing in 2025 (25 bps cuts in August and November). That mentioned, given the softening within the economic system, low inflation and rising unemployment fee, we now count on the RBA to take the money fee into modestly accommodative territory, delivering one other 50 bps thereafter to achieve a cyclical low of two.85% (versus 3.35% beforehand) by mid-2026.”
