Australia’s real GDP growth slowed to 0.3% in the March 2026 quarter, down from 0.9% in the December 2025 quarter, according to official data. Annual real GDP growth held steady at 2.5% for the year ending in March 2026.
Investment in machinery and equipment was the single largest contributor to GDP growth in the March quarter, the Australian Bureau of Statistics reported. Much of the machinery and equipment for datacentres was imported, which contributed to a negative drag from net trade. Treasurer Jim Chalmers pointed to the boom in datacentre construction as a key driver of new business investment, noting Australia has not seen this pace of new business spending since the end of the mining investment boom nearly 15 years ago.
Chalmers said, "This growth is really solid in the circumstances. You think about everything that’s coming at the Australian economy. The fact that we’ve got any growth at all, given the challenging global circumstances, I think is welcome." He added that the March 2026 national accounts data did not fully capture the impacts of the war in the Middle East. "When you remember that this data doesn’t capture the worst parts or the worst consequences of the war in the Middle East, then obviously we can expect some challenging times ahead."
Economic growth per person declined in the March quarter, marking the first such drop in a year. Outside of datacentre investment, investment and economic activity were weak, with increased household consumption offset by a fall in public demand, according to Pat Bustamante, a senior economist at Westpac. Bustamante estimated that datacentre construction added 0.5 percentage points to real GDP growth in the March quarter and about 0.8 points to the annual growth rate.
The economy was slowing even before the Middle East conflict and interest rate hikes began to significantly impact it, Bustamante said. Recent indicators show unemployment has risen to 4.5% and consumer confidence remains low. A technical recession—defined as two consecutive quarters of economic contraction—cannot be ruled out.