The Australian economy took a significant hit in the first quarter of 2026. Real gross domestic product (GDP) grew by just 0.3 percent from January to March, after a 0.9 percent increase in the final quarter of 2025. According to the Guardian, Australians’ living costs are falling again – a trend that had already emerged before the Middle East conflict and the latest interest rate hikes.
Jim Chalmers is trying to put a positive spin on the situation. He warned against talking down the economy. In reality, however, an unusual construction boom in data centres masks much of the negative development. Without this sector, growth would have been even weaker, the Guardian reports.
The economy was still running hot in the second half of 2025, which increased inflationary pressure – even before the US and Israel began bombing Iran in late February. This recent strength makes the now-published decline all the more stark. Australia’s central bank had previously raised interest rates several times to combat inflation.
The Guardian has previously reported on the economic consequences of the Middle East conflict for Australia and the associated risks for the country’s commodity exports.
Source: www.theguardian.com
