Australia’s economy expanded by 1.3% year-on-year in the fourth quarter of 2024, exceeding economists' expectations of 1.2% growth. This marks the first acceleration in GDP since September 2023, driven by strong exports and increased public and private spending.

The Australian Bureau of Statistics described the growth as modest but broad-based, highlighting that both consumer spending and government investment contributed to the improvement. Quarter-on-quarter, GDP rose 0.6%, surpassing the forecasted 0.5% and recording its fastest quarterly growth since Q3 2022.

Central Bank Policy and Market Reaction

The Reserve Bank of Australia (RBA) recently cut interest rates for the first time in over four years to combat economic stagnation and declining inflation. Despite the positive GDP data, financial markets reacted with caution.

Following the report, Australia’s S&P/ASX 200 index fell by 0.88%, while the Australian dollar weakened to 0.6256 against the U.S. dollar. Investors remain concerned about future economic uncertainty, particularly as global trade conditions remain volatile.

Although the GDP growth exceeded expectations, analysts warn that Australia's economy still faces challenges, including housing market fluctuations, high household debt, and global economic risks. Future growth will depend on inflation trends, central bank policies, and trade stability.

As Australia navigates these economic changes, the coming months will be crucial in determining whether this recovery is sustainable or temporary.