Australia’s economy kept growing in the first three months of 2026, but only just. The 0.3% quarterly expansion — the weakest result in a year — fell well short of market expectations of 0.5% and marked a sharp step down from the 0.9% recorded in the December quarter. On an annual basis, output rose 2.5%, also below the 2.7% consensus forecast.

Strip back the headline, and the picture is even more sobering. GDP per capita — the measure that most closely reflects living standards — slipped 0.1% in the quarter, leaving it just 1.0% higher than a year ago. For most Australians, the sense that the economy has not been working for them is borne out in the data.

The single biggest contributor to growth this quarter came from an unlikely source: server racks and cooling systems. Business investment in data centre machinery and equipment surged, with the machinery and equipment sub-category alone jumping 16.3% — its largest quarterly rise in years. Private investment overall added 0.7 percentage points to GDP growth, making it the dominant driver of the expansion. Without it, the rest of the economy would have effectively printed zero.