Australia's economic growth has fallen short of analysts' predictions, yet it still managed its fastest expansion in nearly two years, fueled by robust investment and consumer demand. The country's GDP expanded by 2.1% year-on-year, marking its strongest growth since the third quarter of 2023, according to data from the Australian Bureau of Statistics. This figure missed economists' forecast of 2.2% growth. On a quarter-on-quarter basis, Australia's GDP grew by 0.4%, which is lower than the 0.7% predicted in a Reuters poll. Domestic final demand contributed significantly to this growth, with private investment in machinery, equipment, and major data centers in New South Wales and Victoria driving the pace. Household consumption continued to expand, led by essential services such as insurance, electricity, gas, rent, healthcare, and food. However, net trade had a negative impact, as imports grew faster than exports in the three months leading up to September, reducing the economy by 0.1 percentage point. The Reserve Bank of Australia's governor, Michele Bullock, had previously warned that the economy might have already reached its potential growth limit. Despite this, the central bank maintained its interest rate at 3.6% during the monetary policy meeting last month, expressing caution about further easing due to a strengthening economy, a tight labor market, and persistent inflationary pressures. Bullock also suggested that the current interest rate cutting cycle might be nearing its end, with the central bank forecasting inflation to remain above its target range of 2% to 3% until the second half of next year. The RBA's board is set to meet next week, and it is widely expected to keep interest rates at 3.6%. Australia's inflation accelerated in October, rising by 3.8% year-on-year, marking its fastest pace in seven months. In the second quarter of this year, the country's economy expanded by 1.8% year-on-year, compared to 1.3% in the previous quarter, supported by domestic spending, including household and government consumption.
