Fall in public spending lays bare weakening Australian economy

The need for less constrictive monetary policy is increasing, which places more pressure on the RBA to balance the risks of inflation returning under lower interest rates against a slowing economy, writes KPMG Australia Chief Economist Brendan Rynne.

The tepid growth of 0.2 percent in the March quarter – lower than expected - shows that the recovery of the Australian economy remains fragile. Importantly, gross domestic product (GDP) per capita – effectively living standards - has again gone backwards, falling by 0.2 percent over the March quarter. Notably, public spending, which has been propping up GDP growth in recent months, recorded the most significant fall since the September quarter 2017. In the private sector, inves...

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Authors: Brendan Rynne

Published Date: 05 June 2025