Australian economic growth remains stable in Jan-Mar
Sydney (3 June)
The Australian economy grew by 2.5% on the year in January – March, unchanged from the previous quarter, on a seasonally adjusted volume basis, data from the Australian Bureau of Statistics (ABS) show.
ABS has downgraded Australia’s annual economic growth rate for the September – December 2025 quarter from 2.6% to 2.5%, data released on 3 June show.
Australia’s information media and telecommunications sector expanded by 6.2% on the year in January-March, while its agricultural sector contracted by 0.7% over the same period, according to the ABS.
The country’s mining, manufacturing, wholesale trade, accommodation and food services, administrative services, and real estate sectors all grew by 3 – 4%.
Australian labour productivity rose by 0.3% on the year in the first quarter of 2026, down from 1% in late 2025. But real wage costs rose by 0.5% on the year, after falling by 0.1% on the year in September – December 2025.
Real wage costs for some businesses will increase in July. The Fair Work Commission (FWC) has decided to increase Australia’s minimum award wage rate by 4.75%, to at least A$26.44 per hour, from 1 July.
The FWC’s minimum award wage increase is unlikely to affect the competitiveness of the Australian economy because the sectors most impacted by it are not, for the most part, trade-exposed, the agency said. But it will increase employment costs for some businesses, it added.
ABS’ economic growth figures for January – March cover the first month of the US-Israeli war in Iran. Fuel and fertiliser prices rose over the quarter because Iran closed the Strait of Hormuz in late February, in response to attacks.
Regular unleaded petrol and diesel prices rose 33% and 41% on the month in March, respectively, pushing up Australia’s annual automotive fuel inflation rate to 24%, ABS data show. Australia’s annual automotive fuel inflation rate last exceeded 20% in July 2022, soon after Russia’s invasion of Ukraine.
The International Monetary Fund (IMF) expects Australia’s economy to grow by 2% – in real terms – over 2026, under its baseline forecasts, the agency said on 15 April.
“Our [baseline] forecast assumes a short‑lived [Iran] conflict and a moderate 19% rise in energy prices in 2026,” IMF Research Director Pierre-Olivier Gourinchas said at a press conference.