Australia’s economy grew more than expected in the first quarter

Australia’s gross domestic product increased 0.8% in the first three months this year, above forecasted 0.7% growth, while annual growth was at solid 3.3%, although below Q4 2021 upwardly revised 4.4% expansion, but beat expectations at 2.9% and strongly exceeded pre-pandemic average of around 2%, with increased household consumption being one of key drivers of faster than expected economic growth in the first quarter.

New Australian Prime Minister has pointed to the strength of the economy, as country’s labor market is the tightest in nearly five decades, adding to expectations for a stronger growth in the second quarter, though considering a surging inflation and darkening global economic outlook.

The Reserve Bank of Australia remains confident for further policy tightening, with markets expecting the central bank to raise interest rate to 0.6% at the June meeting, implying that rates could rise to 2% -2.5% by the end of the year.

The Australian economy remains at the firm path that adds to the central bank’s aims to cool soaring inflation, which hit 5.1% in the first quarter, lifted mainly by rising energy prices and building costs.