Australia’s economy grew 0.8% in the December quarter 2025, according to the Australian Bureau of Statistics (ABS) National Accounts released on 4 March 2026. Annually, GDP grew 2.6% — the fastest annual growth rate in nearly three years, beating the market forecast of 2.2%. It was the 17th consecutive quarter of growth, and the first time in several quarters that private and public demand contributed equally to the result.
The March quarter 2026 (Q1 2026) data is due for release on 3 June 2026. This article covers the most recent confirmed GDP data and what the 2026 environment means for Australia’s growth outlook.
December Quarter 2025 — The Headline Numbers
| Measure | Result |
|---|---|
| Quarterly GDP growth | +0.8% |
| Annual GDP growth | +2.6% |
| Market forecast (quarterly) | +0.6% — beat by 0.2ppt |
| Market forecast (annual) | +2.2% — beat by 0.4ppt |
| Consecutive quarters of growth | 17th |
| GDP per capita (annual) | +0.9% — strongest since Dec 2022 |
Source: ABS Australian National Accounts: National Income, Expenditure and Product, December 2025 (released 4 March 2026)
The result marked a genuine acceleration. Growth had been running at 0.3–0.5% per quarter through most of 2025. The December quarter jump to 0.8% reflected broad-based strength — 17 out of 19 industries grew in the quarter.
What Drove the December Quarter Result
Private demand and public demand each contributed 0.3ppt — a balanced result that the RBA flagged as evidence of stronger-than-expected private sector momentum.
Household consumption +0.3% Discretionary spending led the rise. Hotels, cafes and restaurants grew 1.4% as Australians spent on domestic travel during major sporting events and concerts. Black Friday and Boxing Day sales drove strong growth in furnishings and household equipment (+2.1%) and clothing and footwear (+1.3%). Recreation and culture rose 0.8% on the back of strong smartphone sales and live entertainment.
Private investment +0.7% The fifth consecutive quarter of private investment growth, with elevated spending on data centres and aircraft. Over the year, private investment grew 2.3%.
Government expenditure +0.9% State and local government investment grew 1.4% driven by transport infrastructure. Commonwealth government investment grew 3.3% driven by higher defence assets.
Inventories +0.4ppt Firms rebuilt inventory stocks through both production and imports. Mining inventories saw a moderate buildup with increased coal production. Retailers built stocks to service extended Black Friday and Boxing Day sales.
Net trade -0.1ppt The one drag on the quarter. Imports grew 1.8%, outpacing exports at 1.4%. Strong domestic demand pulling in more imports was the primary cause — a sign of economic strength rather than weakness in this context.
GDP Growth — Full Quarterly Timeline
| Quarter | Quarterly growth | Annual growth |
|---|---|---|
| Dec 2023 | -0.1% | 1.3% |
| Mar 2024 | +0.4% | 1.1% |
| Jun 2024 | +0.2% | 0.9% |
| Sep 2024 | +0.3% | 0.8% |
| Dec 2024 | +0.3% | 1.2% |
| Mar 2025 | +0.4% | 1.3% |
| Jun 2025 | +0.6% | 1.9% |
| Sep 2025 | +0.5% | 2.1% |
| Dec 2025 | +0.8% | 2.6% |
Source: ABS National Accounts
The trend is clear — Australia’s economy was running very slowly through 2024 and early 2025, then accelerated through the second half of 2025. The 2.6% annual rate in December represents a genuine step-up, driven partly by rate cuts in early 2025 releasing pent-up household demand.
Household Savings — A Key Signal
The household saving ratio rose to 6.9% in the December quarter — the highest since September 2022. Household disposable income grew 1.8%, significantly above the nominal increase in household spending of 1.1%.
This matters for the economic outlook in two ways. First, it confirms households are earning more and choosing to save rather than spend — building financial buffers after years of pressure. Second, it represents a potential reservoir of future spending that could sustain growth in 2026 — or alternatively remain unspent if confidence deteriorates due to further rate hikes.
Compensation of employees rose 1.4% for the quarter and 6.5% annually — wage growth remains well above inflation on an annual basis, which is improving real household incomes for the first time in several years. For context on how wages are tracking, see our wages Australia 2026 guide.
Industry Breakdown — Who Grew
Growth was genuinely broad-based with 17 out of 19 industries expanding in the December quarter.
Strongest performers:
- Mining — production up 2.6%, contributing 0.3ppt to GDP. Mines resumed work following scheduled maintenance in the previous quarter. Mining profits increased 5.7% — the strongest quarterly increase since March 2023
- Agriculture — production up 2.5%, reflecting favourable growing conditions and strong international demand for Australian beef and lamb
- Tourism — 736,800 tourism jobs in the December quarter, up 4.7% year-on-year
By state:
- ACT: +3.5% (strongest of any state)
- Queensland: +2.2%
- Western Australia: +1.3%
- Victoria: +1.1%
The Context — Why 2024-25 Was So Weak
While the December quarter result was strong, it is worth understanding the baseline. The full 2024-25 financial year saw GDP grow just 1.4% — the weakest annual growth since the early 1990s, excluding the COVID-19 year. GDP per capita was essentially flat or declining for much of 2024.
The weak 2024-25 result reflected the combined weight of aggressive rate hikes in 2022-23, cost of living pressures, and households diverting income toward debt servicing rather than spending. The three rate cuts delivered by the RBA in early 2025 — bringing the cash rate from 4.35% to 3.60% — unlocked some of that suppressed demand, contributing to the acceleration through the second half of 2025.
That recovery has now been interrupted. The RBA’s February and March 2026 rate hikes — taking the cash rate back up to 4.10% — represent a direct reversal of the stimulus that drove the late-2025 acceleration. For the full rate timeline and what the May 2026 decision means, see our RBA interest rates 2026 guide.
The 2026 Outlook — What to Expect
IMF forecast for Australia 2026: +2.0% annual growth
The 2026 growth outlook is materially complicated by three factors running simultaneously:
Rate hikes tightening household budgets — the February and March 2026 hikes added approximately $165-180 per month to a $600,000 variable mortgage. With more hikes potentially coming in May, household consumption — which drove the second half of 2025 recovery — faces renewed headwinds.
The Middle East oil shock — fuel prices surging ~50 cents per litre since late February 2026 act as an effective tax on households and businesses. Higher freight and transport costs will flow through to consumer prices and squeeze margins across supply chains.
Strong business investment — private investment grew for five consecutive quarters and data centres, defence, and infrastructure spending remain robust pipeline. This provides a structural floor under growth that household spending alone cannot.
The March quarter 2026 GDP data — covering January to March 2026 — will be the first reading that captures the full impact of both the February rate hike and the Middle East oil shock simultaneously. Given these two simultaneous headwinds, many economists expect the March quarter to show a material slowdown from the December quarter’s 0.8%.
The ABS will release the March quarter 2026 National Accounts on 3 June 2026.
Key Takeaways — Australia GDP Growth 2026
Australia’s economy grew 0.8% in the December quarter 2025 — 2.6% annually, the fastest in nearly 3 years. It was the 17th consecutive quarter of growth with 17 of 19 industries expanding. Household saving rose to a three-year high at 6.9%, building buffers. Mining and agriculture led industry growth. The 2024-25 full year was the weakest since the 1990s at 1.4% — the December acceleration reflected rate cut stimulus. The 2026 outlook is clouded by renewed rate hikes and the Middle East oil shock. The IMF forecasts 2.0% annual growth for Australia in 2026. March quarter 2026 data releases 3 June 2026.
Frequently Asked Questions
What is Australia’s GDP growth rate in 2026?
The most recent confirmed data is for the December quarter 2025, showing quarterly growth of 0.8% and annual growth of 2.6% — the fastest in nearly three years. The IMF forecasts full-year 2026 GDP growth at 2.0%. March quarter 2026 data releases on 3 June 2026.
When does the next Australian GDP data release?
The ABS will release the March quarter 2026 National Accounts on 3 June 2026. This will be the first GDP reading covering January to March 2026 — and the first to capture the full impact of the February rate hike and the Middle East oil shock.
How many consecutive quarters has Australia grown?
Australia recorded its 17th consecutive quarter of GDP growth in the December quarter 2025 — one of the longest uninterrupted growth streaks in Australia’s modern economic history.
What drove Australia’s GDP growth in the December quarter 2025?
Growth was broad-based. Private and public demand each contributed 0.3ppt. Mining production rose 2.6% following maintenance shutdowns. Household discretionary spending lifted on Black Friday and events spending. Private investment grew for a fifth consecutive quarter. 17 of 19 industries expanded.
Did Australia grow faster than expected in December 2025?
Yes. The December quarter result of 0.8% beat the market forecast of 0.6% and the annual result of 2.6% beat forecasts of 2.2%. It was the strongest quarterly result since June 2025.
Will Australia go into recession in 2026?
Based on current data, recession is not the base case. The IMF forecasts 2.0% growth in 2026. However, the combination of renewed RBA rate hikes and the Middle East energy shock presents material downside risks to household consumption — the largest component of GDP. The March quarter 2026 data on 3 June will be the key test.
For broader context on the Australian economic environment in 2026, see our Australia CPI March 2026 guide and our RBA May 2026 decision preview.
This article is for general informational purposes only. GDP data is sourced from the ABS Australian National Accounts. Forecasts are from publicly available IMF and economist sources. The March quarter 2026 data releases on 3 June 2026 — this article will be updated at that time.
