Australia's Economy Beats Expectations with 2.1% Annual Growth

Australia's economy has surpassed expectations in the second quarter, growing at an annual rate of 2.1%. The data released by the Australian Bureau of Statistics shows that on a quarter-on-quarter basis, GDP rose 0.4%, also exceeding forecasts of 0.3%.

The growth was driven by private demand and mining exports, but households continued to be cautious with their spending, which only increased by 0.4%. This is attributed to the ongoing Middle East conflict, which led to higher fuel prices and reduced consumption, as well as a decrease in domestic and international travel.

Despite these headwinds, the stronger-than-expected GDP print will give the Reserve Bank of Australia more room to pursue its policy tightening efforts aimed at curbing inflation. The RBA had considered additional tightening measures due to high inflation rates, which reached 3.5% in July, surpassing expectations of 3.3%. The bank forecasts that inflation will decline gradually and return to its target range by late 2027.