Australia’s Economy Shrinks Per Capita Amid Slow Growth

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Australia’s economy barely budged in the first three months of the year, growing by just 0.2% in the March quarter — a noticeable slowdown from the 0.6% growth we saw at the end of 2024.

New figures released this morning show the economy grew 1.3% over the past 12 months, which is pretty much in line with what analysts had been expecting. Most had predicted something in the range of 0.1% to 0.3% for the quarter.

But it’s not all good news — in fact, if you zoom in on what’s happening per person, things are sliding backwards again. Per capita GDP — basically the average economic output per Australian — fell 0.2% this quarter and is down 0.4% over the year. That means we’re technically in a per capita recession, even though the overall economy is still crawling forward.

So, what’s slowing us down?

According to the extreme weather played a big role. Cyclone Alfred and other severe events hit key industries like mining, tourism, and shipping, all of which were disrupted. At the same time, public sector spending dropped sharply, marking its biggest drag on growth since late 2017.

Household spending also lost momentum — growing just 0.4% this quarter, down from 0.7%. Even though many Australians saw a boost in income thanks to wage rises, government support payments, and insurance payouts related to weather damage (especially in Queensland), a lot of that extra money wasn’t spent. It was saved.

Head of national accounts Katherine Keenan explained it this way:

“The 1.3 percentage point rise in the household savings ratio this quarter included higher income support from government and insurance claims… There was also a small rise in small business income, while mortgage interest payments dropped following the RBA’s rate cut in February.”

In short: Aussies had a little more money, but they played it safe — choosing to squirrel it away rather than splash out.

All in all, it's a snapshot of an economy that's growing, but only just — weighed down by bad weather, cautious consumers, and a few shaky sectors.

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