Australia's Economy Slows, but Beats Forecasts with 2.1% Q2 Growth

Australia's economy expanded by 2.1% year-on-year in Q2 2026, exceeding market expectations of 1.8%. The growth rate slowed from 2.5% in Q1 but still beat forecasts.

The slowdown was driven by rising borrowing costs and elevated fuel prices, which squeezed household purchasing power and weighed on consumer spending.

The stronger-than-expected GDP figure leaves room for the Reserve Bank of Australia to continue monetary tightening aimed at curbing inflation. Inflation remains high, with a 3.5% year-on-year rate in July, exceeding market expectations of 3.3%.