Australia's GDP expanded 0.2 percent on the quarter in the three months to March, slowing from the 0.6 growth recorded in the three months to December and falling short of the consensus forecast of 0.5 percent. The economy has grown at a weak pace for two years, reflecting the impact of tight monetary policy settings. GDP rose 1.3 percent on the year in the three months to March, as it did in the three months to December and below the consensus forecast of 1.5 percent.

Household spending rose 0.4 percent on the quarter, while private investment increased 0.7 percent. Public investment, however, fell 2.0 percent on the quarter, while net trade made a negative contribution of 0.1 percentage points. Weather events caused substantial disruption to exports during this period.

Today's data cover the period in which officials at the Reserve Bank of Australia cut policy rates for the first time since 2020. Officials also cut rates further at their last meeting mid-May. Today's data, however, suggest that previous policy tightening is continuing to weigh on demand and activity.

Q1 growth seen up 0.5 percent on the quarter and 1.5 percent on year.

Gross domestic product (GDP) is the broadest measure of aggregate economic activity and encompasses every sector of the economy and is usually released early in the third month after the reference period.

GDP is the all-inclusive measure of economic activity. Investors need to closely track the economy because it usually dictates how investments will perform. Stock market Investors like to see healthy economic growth because robust business activity translates to higher corporate profits. The GDP report contains a treasure-trove of information which not only paints an image of the overall economy, but tells investors about important trends within the big picture. These data, which follow the international classification system (SNA93), are readily comparable to other industrialized countries. GDP components such as consumer spending, business and residential investment, and price (inflation) indexes illuminate the economy's undercurrents, which can translate to investment opportunities and guidance in managing a portfolio.

Each financial market reacts differently to GDP data because of their focus. For example, equity market participants cheer healthy economic growth because it improves the corporate profit outlook while weak growth generally means anemic earnings. Equities generally drop on disappointing growth and climb on good growth prospects.

Bond or fixed income markets are contrarians. They prefer weak growth so that there is less of a chance of higher central bank interest rates and inflation. When GDP growth is poor or negative it indicates anemic or negative economic activity. Bond prices will rise and interest rates will fall. When growth is positive and good, interest rates will be higher and bond prices lower.