Australia's economic weakness persisted in the three months through June as consumers hunkered down in the face of elevated borrowing costs and stubbornly sticky inflation.

Gross domestic product advanced 0.2% from the prior quarter, matching economists' estimate, Australian Bureau of Statistics data showed Wednesday. From a year earlier, the economy grew 1% from a upwardly revised 1.3% and forecast of 0.9%.

"Excluding the Covid-19 pandemic period, annual financial year economic growth was the lowest since 1991-92 — the year that included the gradual recovery from the 1991 recession," Katherine Keenan, ABS head of National Accounts, said in a statement. GDP per capita slid for a sixth consecutive quarter, she added.

The Australian dollar held onto its declines, as did the interest-rate sensitive three-year government bond yield.

With annual growth slowing from a decade average of 2.4%, the data are likely to ease concerns about demand-driven inflation pressures in the economy. That suggests the RBA can remain in a holding pattern for a while in order to assess the economy, with the cash rate currently at a 12-year high of 4.35%.

The RBA reckons the second quarter was the nadir of the slowdown, predicting the annual expansion will accelerate to 1.7% by year's end before picking up to 2.5% in late 2025. 

Bloomberg Economics expects growth will remain subdued this year, as the cumulative impact of higher rates damps household demand and housing-related activity.

Source : Bloomberg