Australian Q4 GDP growth data expected to remain soft, seen strengthening in 2025

Analysts at National Australia Bank (NAB) expect Australia’s economy to have grown by 0.5% in the fourth quarter of 2024, bringing annual GDP growth to 1.2% year-on-year.

According to NAB’s forecast, household consumption is likely to be the main contributor to GDP growth in the December quarter. This suggests that consumer spending has shown resilience, despite ongoing cost-of-living pressures and the impact of higher interest rates. However, outside of consumption, other private sector components—including business investment and housing construction—are expected to remain soft.

The combination of high borrowing costs, subdued business sentiment, and weaker global economic conditions has weighed on private investment, while the residential construction sector continues to face headwinds from supply constraints and elevated input costs.

NAB maintains its view that economic activity will begin to strengthen over 2025, with the second half of 2024 marking the low point in the current cycle.

If NAB’s Q4 GDP forecast is the outcome, its broadly in line with the Reserve Bank of Australia’s (RBA) growth projections, meaning it is unlikely to trigger a major shift in the central bank’s monetary policy stance on its own. However, the key question for the RBA will be how sustained the rebound in consumption growth proves to be and how quickly economic momentum builds in 2025.

If consumption remains resilient and GDP growth strengthens as expected, the RBA may delay any potential rate cuts until it is confident that inflation has returned sustainably to its target range. Conversely, if growth remains sluggish and household spending slows again, pressure could build for a sooner-than-expected shift in policy to support the economy.

The data is due on Wednesday, March 5, 2025 at 11.30 am Sydney time, which is 0030 GMT and 1930 US Eastern time:

This article was written by Eamonn Sheridan at www.forexlive.com.