Australia’s Gross Domestic Product (GDP) grew by 0.2% QoQ in the second quarter of 2024, compared to the 0.1% growth in the first quarter. This reading was below expectations of 0.3%. The annual first-quarter GDP expanded by 1.0%, in line with the consensus. Subdued household demand, weak household consumption, and investment not contributing to growth were some of the trends observed in the Australian GDP data. Net trade and government consumption, on the other hand, made positive contributions to GDP growth.
The market reaction to Australia’s GDP data saw the Australian Dollar attracting some buyers following the release. The AUD/USD pair was trading at 0.6700, losing 0.15% on the day. The Australian Dollar also performed well against other major currencies, being the strongest against the New Zealand Dollar. The percentage changes of Australian Dollar against listed major currencies were most notable against the New Zealand Dollar in the latest data.
The Gross Domestic Product report for Australia was expected to post a modest 1% yearly advance, with the Reserve Bank of Australia closely monitoring the figures before their September meeting. The Australian Dollar was likely to extend its decline following the expected tepid GDP figures. The Australian economy was expected to have grown by 0.3% in the second quarter and 1% in the twelve months to June, the lowest pace of growth since the 2020 recession.
The impact of GDP figures on the Australian Dollar is significant, as faster-than-anticipated growth could positively impact the AUD by reflecting economic progress and lower fears of interest rate hikes. On the other hand, slower progress could push the AUD lower and trigger speculation that the RBA may need to trim interest rates, negatively affecting the local currency. The upcoming release of the GDP report was expected to influence market participants’ outlook on the RBA decision.
GDP FAQs provide insights into the importance of GDP as a measure of economic growth and its impact on currency strength. A higher GDP result is generally positive for a nation’s currency as it reflects a growing economy with increased exports and foreign investment. Trade balance, inflation, and interest rates are also significant factors that can influence the value of the Australian Dollar in response to GDP growth. It is essential to consider these economic indicators when evaluating the performance of the Australian economy.
Overall, the Australian GDP data for the second quarter of 2024 showed modest growth, with various contributing factors impacting the results. The market reaction to the data and the performance of the Australian Dollar against major currencies highlighted the significance of GDP figures in influencing currency movements. As the Reserve Bank of Australia continues to monitor economic indicators, including GDP, the impact on interest rates and inflation will remain key factors affecting the Australian Dollar in the coming months.
