The quarterly GDP growth figure of 0.2 per cent fell short of the already low expectations set by economists and was three times slower than March projections.

Krishna Bhimavarapu, APAC economist at State Street Global Advisors, said the weak data fundamentally changes the approach to the Australian economy.

"Today's GDP growth data came in below our low bar (0.3% q/q) at 0.2%; it's three times slower than what we pencilled in March," Bhimavarapu said.

"This changes the fundamental approach to the Australian economy as the RBA may ease faster and potentially by larger magnitude when they meet next."

The economist said the data resolves questions about the effectiveness of the central bank's monetary policy stance.

"Either way, the data settles the debate that the cash rate remained restrictive for longer than perhaps needed and that growth is affected as a result," Bhimavarapu said.

The weak GDP figures suggest the Reserve Bank's restrictive monetary policy may have weighed more heavily on economic activity than initially anticipated.

The data is likely to influence the RBA's future policy decisions, with the possibility of more substantial rate cuts being considered at upcoming meetings.

more on this topic

Economy

Financial pressures and the 'she'll be right' attitude delay Australian divorces

In a revealing study, the Real Cost of Separation Report 2026 by Real Insurance has uncovered a trend of 'quiet uncoupling' among Australians, with financial pressures and concerns for children ...Read more

Economy

Labour market resilience provides RBA room for manoeuvre, says State Street economist

In the wake of the latest Labour Force data release, State Street, a global leader in financial services with a staggering US$54.5 trillion in assets under custody and administration and US$5.5 ...Read more

Economy

Geopolitical tensions shape investor strategies in private markets

In the face of mounting geopolitical tensions, investors are honing their strategies in private markets, as revealed by the 44th edition of the Coller Capital Global Private Capital BarometerRead more

Economy

Ellerston sees investment shift as Middle East tensions ease and inflation persists

Amid signs of easing tensions in the Middle East with US-Iran peace negotiations progressing, albeit at a slower pace than desired by markets, investors are being advised to reevaluate their ...Read more

Economy

Global markets face stagflationary pressures amid rising inflation and diverging growth

In a recent macroeconomic report, the Franklin Templeton Fixed Income team has highlighted that global markets are increasingly encountering a stagflationary environment, characterised by intensifying ...Read more

Economy

Corporate capex provides solid footing for US equities, says ClearBridge

In a promising development for the US economy, corporate capital expenditures (capex) are playing a crucial role in supporting economic growth, according to Jeff Schulze, head of economic and market ...Read more

Economy

Brands turn to household care and laundry strategies to weather cost-of-living crisis

As the UK braces for a 13% hike in its energy price cap by July 2026 and US gas prices soar to a four-year high due to geopolitical tensions, the global spotlight is once again on the cost-of-living ...Read more

Economy

GDP data prompts State Street expert analysis on cash rate and trade surprises

In light of the latest GDP figures, State Street, a global leader in financial services with a staggering US$54.5 trillion in assets under custody and/or administration and US$5.5 trillion in assets ...Read more