Australia's Economy Surges in Q4, But Global Risks & Inflation Cloud Outlook

• Australia's economy grew 0.8% in Q4 2025, fastest annual pace in nearly three years at 2.6%.
• Strong growth and elevated inflation (3.8%) increase likelihood of RBA rate hike in May.
• Geopolitical tensions in the Middle East, particularly Strait of Hormuz disruptions, push oil prices up, impacting consumers.
• Despite headline growth, household spending remains cautious; savings ratio rose to 6.9%.
• Policymakers face challenge of balancing growth with inflation control amid global uncertainty.