Australia’s economy grew less than expected in the first quarter this year, the Australian Bureau of Statistics said in a statement Wednesday, as growth stalled amid the simmering global trade tensions.

The economy grew 1.3% year-on-year in the first quarter, lower than the estimated 1.5% growth in a Reuters poll. That was unchanged from the 1.3% year-on-year growth in the prior quarter.

On a quarter-on-quarter basis, the economy expanded 0.2%, undershooting expectations for a 0.4% growth.

Katherine Keenan, ABS head of national accounts, attributed the soft growth to shrinking public spending and weakened consumer demand and exports.

“Public spending recorded the largest detraction from growth since the September quarter 2017. Extreme weather events reduced domestic final demand and exports. Weather impacts were particularly evident in mining, tourism and shipping,” said Keenan.

The Reserve Bank of Australia slashed rates to its lowest level in two years at its last meeting in May as inflation concerns receded, offering some room for the RBA to ease monetary policy.

The central bank said in its statement after the meeting that it expects domestic GDP growth to pick up in 2025, driven by a recovery in consumption and continued strength in public demand.

“However, the pick-up is expected to be more gradual than previously forecast due to weaker global demand, global and domestic uncertainty and weaker momentum in consumption,” it added.

Inflation in the country has eased to a four-year low of 2.4% in the first quarter of 2025, within the RBA’s target range of 2% to 3%.

The RBA said last month that its baseline assumptions for the economy would reflect the “somewhat weaker” demand for Australian exports.

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