Australia GDP Growth Beats Forecasts, Raising Hike Expectations

Australia's economy grew at a rate of 0.4% in the second quarter, exceeding economists' expectations and beating the forecast of 0.3%. This acceleration follows a revised 0.3% increase in the March quarter.

The annual growth rate was 2.1%, slowing from 2.5% but still higher than the predicted 1.8%. The Australian Bureau of Statistics released this data on Wednesday, highlighting the economy's resilience despite subdued spending across most categories.

Household consumption rose by 0.4%, while private business investment fell after a significant increase in the previous quarter. Imports of goods increased by 2.4% due to higher demand for cars and planes, but services imports declined by 4.9%. Exports also grew by 0.8%, driven by coal production.

Capital Economics analysts believe this growth will likely prompt another interest rate hike from the Reserve Bank of Australia (RBA), possibly as early as September. They point out that while inflation remains a concern, household spending data suggests consumption may be accelerating.