📈Australia’s Economic Growth Update - March 2025 📈

Australia’s economy grew by 0.6% in the December quarter and 1.3% throughout 2024. The data showed GDP per person increased by 0.1% in the December quarter, marking the end of 7 consecutive quarters of declining GDP per capita, indicating a modest improvement in living standards. The growth was primarily driven by increased consumer spending and stronger exports. Households spent more on furniture, appliances, clothing, health care and electricity. Consumption grew by 0.4%, adding to economic growth.

Households also saved more with the saving to income ratio growing from 3.6% to 3.8%, the highest in nine quarters. Households were able to both save and spend more due to the strong growth of wages. The real value of people’s incomes had risen by 0.2% per person in the December quarter, reflecting moderating inflation, solid wage and employment growth, and the government’s tax cuts for individuals. The recent cash rate cut is expected to further boost real gross disposable income in future quarters as well as promote household spending and business investment.

Exports also contributed to our positive economic growth. Agriculture was a strong performer (up 7.3%) due to meat exports to the United States and increased grains production following favourable weather conditions.

Despite the worst being behind Australia, our ongoing productivity problem still needs to be addressed. Australian workers are no more productive today than they were nine years ago, and governments have not prioritised improving productivity growth in their policy platforms.

Globalisation has also led to external threats to Australia’s outlook. US President Donald Trump has doubled the tariff on Chinese imports from 10% to 20%, leading to China’s consideration of retaliation. We rely on China as our major trading partner, and due to the international business cycle, if China’s economy slows, so will ours.

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