Australia’s economic growth stays flat at 1.3% in the first quarter

The Australian economy increased less than expected in the first quarter this year, said the Australian statistics office statement Wednesday, when growth calmed down in the midst of simmering world trade tensions.

The economy increased by 1.3% in annual sliding in the first quarter, less than the estimated growth of 1.5% in a reuters survey. Who was unchanged by 1.3% growth in annual shift in the previous quarter.

Based on a quarter in quarter, the economy increased by 0.2%, subcontracting expectations for growth of 0.4%.

Katherine Keenan, head of ABS national accounts, has attributed gentle growth to the reduction of public spending and to weaken consumers’ demand and exports.

“Public spending has recorded the greatest detraction in growth since the quarter of September 2017. Extreme weather events have reduced interior final demand and exports. The weather impacts were particularly obvious in mining, tourism and shipping,” said Keenan.

THE Official distribution data have shown that the largest trails of the activity come from the request of the public and the net trade, each subtraction of 0.1 percentage point of the quarterly GDP figure, while the private demand has increased production by 0.3 percentage points.

The Reserve Bank of Australia Reduced rates to 3.85%, its lowest level in two yearsDuring its last meeting in May, while inflation problems fell, offering a certain scope to strengthen growth and counter increasing global trade risks.

The release of the GDP of the first quarter could strengthen the case so that the RBA softens the monetary policy more, said Abhijit Surya, the main economist of APAC at Capital Economics, in a note, because high economic uncertainty can encourage households to prioritize savings on expenses.

Nevertheless, Surya warned that the rising risks of the persist of inflation, while labor costs continued to grow at a faster rate than the RBA inflation objective, maintaining the idea that the central bank will not reduce the rate to 3.35% in the current relaxation cycle.

Australian consumer inflation has been held at a four -year low 2.4% in the first quarter From 2025, in the RBA target beach from 2% to 3%. In April alone, monthly inflation was also stable at 2.4% compared to a year earlier.

The Central Bank said last month that it expects Indoor GDP growth to be collected in 2025Pulled by a resumption of consumption and a continuous force of public demand, while demand “a little lower” for its exports could weigh on growth.

Sound minutes The May 20 meeting showed The Central Bank’s board of directors has considered reduction rates of 50 disproportionate basic points, citing the prices “much higher than expected” by the Trump administration and “very unpredictable” pricing decisions in the future.

Some members of the Board of Directors have debated that a large reduction could provide “greater insurance” against the increase in global trade risks. The central bank finally proceeded with the more predictable path 25 basic points cuts Last month, leaving the door open for more rate drops.

Ben Udy, principal economist at Oxford Economics, is of the opinion that other signs of economic weakness extending in the second quarter could encourage the central bank to reduce rates again in July, earlier than its current forecasts.

“Gabilating the uncertainty on GDP is only worsening,” said UDY in a note on Wednesday.

The S&P / ASX 200 reference index increased by 0.83% after the GDP version, while the Australian dollar remained stable, the last exchange at 0.6460 compared to the dollar.