Business & Finance
Australia's economic growth slows to 2.1% as vehicle purchases offset drop in foreign travel
National accounts data for the June quarter show softer annual GDP growth, with overall activity sustained primarily by population increases and electric vehicle sales.
The short version
- Australia's annual economic growth slowed to 2.1% in the year to June, down from 2.5% in the previous quarter, while quarterly real GDP expanded by 0.4%.
- Household spending saw a shift as international travel dropped for the first time since the pandemic, while electric and hybrid vehicle sales surged by 10%.
- Real GDP per capita fell by 0.1% during the quarter, indicating that national economic expansion is driven by population increases rather than gains in productivity.
- Economists project annual growth may slow further toward 1.3% to 1.5% by the end of 2026 amid ongoing interest rate pressures and living costs.
Key facts
- Data from the Australian Bureau of Statistics shows annual GDP growth eased to 2.1% in the year to June, down from 2.5% in the year to the March quarter.[The Guardian]
- Real GDP grew by 0.4% in the three months to June, while real GDP per person contracted by 0.1% over the same period.[The Guardian]
- Vehicle acquisitions rose by 10% in the quarter, with electric and hybrid purchases generating roughly three-quarters of the quarterly consumption growth.[The Guardian]
- Australians traveling abroad for the northern hemisphere summer declined for the first time since the Covid-19 pandemic amid higher jet fuel prices and Middle East tensions.[The Guardian]
- Labor productivity, measured as real GDP per hour worked, remained flat in the June quarter and declined 0.2% over the full year.[The Guardian]
What remains uncertain
- The extent of further economic deceleration through late 2026 remains subject to debate, with economists forecasting a drop to 1.3%-1.5% as monetary policy impacts unfold.[The Guardian]