Key facts
- Australia's net trade was a major drag on the economy in Q1.
- Imports of data center equipment and fuel surged in Q1.
- Government spending contributed nothing to economic growth in Q1.
- Inventories are expected to add 0.2 percentage points to growth.
- The current account deficit widened to A$27.1 billion in Q1.
Australia's economy is showing signs of slowing momentum, with Q1 data indicating that a widening trade deficit and stagnant government spending are acting as significant headwinds. The surge in imports, particularly for data center equipment and fuel, coupled with the ongoing impact of geopolitical events like the Iran war, are contributing to economic fragility. This comes as the central bank navigates inflation and aims for a soft landing.