Australia's economy barely grows, raising slowdown alarms | The Business | ABC NEWS

Economic growth nearly grinded to a halt in the first three months of year as the war in the Middle East and rising interest rates began to take their toll. Australia's economy grew at a sluggish pace of 0.3 per cent in the March quarter, much weaker than the 0.9 per cent recorded in the previous quarter. The rapid slowdown in the quarterly rate of growth coincided with the Reserve Bank's decision to lift interest rates in February and March. On an annual basis, the economy grew by 2.5 per cent. The ABC spoke to a hairdresser, builder and a greengrocer, who all say they're feeling the pinch. They say they're copping a double whammy from higher interest rates and inflation, and their customers are cutting back on spending or cancelling jobs all together. Spending on luxury items barely rose, at just 0.1 per cent. But household spent most of their money on essentials, driven by an 11.7 per cent lift on electricity and fuel as the oil crisis ramped up. Of the 19 sectors the Australian Bureau of Statistics (ABS) examines, five went backwards, including accommodation and food Services. Mining took the biggest hit, as cyclones hit exports. One unexpected bright spot was the AI boom. Spending on data centres drove a 16 per cent growth in machinery. Treasurer Jim Chalmers says the government is still battling Australia's productivity problem. These latest GDP figures, which take in data to March, don't take into account the full impacts of the global oil shock or the Reserve Bank's May interest rate hike. But economists are split on what the RBA will do next. The Commonwealth Bank predicts no more rate hikes. AMP's My Bui says the bank is forecasting two more rate hikes this year. #ABCBusiness Subscribe: http://ab.co/1svxLVE Read more here: https://www.abc.net.au/news/2026-06-03/asx-markets-business-live-news/104687282 Note: In most cases, our captions are auto-generated. #ABCNEWS #ABCNEWSAustralia