SYDNEY, AUSTRALIA – MAY 30: The Sydney Harbor Bridge and skyline are illuminated during ‘Vivid Sydney 2024’ on May 30, 2024 in Sydney, Australia.
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Data released on Wednesday showed Australia’s second-quarter economic growth was stronger than expected, expanding by 2.1% year-on-year.
Economists polled by Reuters had expected growth of 1.8%, compared with 2.5% in the previous quarter.
Compared to the previous quarter, GDP increased by 0.4%, which was also slightly higher than the expected 0.3% increase. Small growth was driven by private demand and mining exports.
The Australian Bureau of Statistics said in a statement that spending remained subdued, increasing by just 0.4%, and households continued to exercise caution. As prices soared due to the Middle East conflict, households reduced fuel consumption and domestic and international travel.
Stronger-than-expected GDP growth will give the Reserve Bank of Australia more room to tighten policy to curb inflation.
At its previous meeting, some RBA board members considered the need for further tightening, saying domestic inflation remained too high.
Australia’s July inflation rate was better than expected, coming in at 3.5%, compared to the expected 3.3%.
The RBA expects inflation to fall moderately and return to around the middle of its target range of 2% to 3% by the second half of 2027.
