Major banks expect GDP data on Wednesday to reflect a small increase, supported largely by consumption, with other private sector components expected to remain soft.

GDP is expected to have increased by 0.5 per cent last quarter, according to NAB and Commonwealth Bank forecasts of national accounts data to be released on Wednesday.

NAB predicted the data will show quarterly household consumption growth of 0.7 per cent, as partial spending data measures were up in the December quarter.

Uplift in consumer spending has been underpinned by rising household disposable income, supported by a resilient labour market and tax cuts.

According to NAB, 0.5 per cent quarterly growth in GDP would be in line with the Reserve Bank (RBA)’s February forecasts. The RBA will likely be paying close attention to wage growth and the labour market, which continue to be strong.

Commonwealth Bank (CBA) expected to see soft growth in total business revenue at 0.3 per cent over the quarter.

“While we have seen some pick up in household consumption growth and dwelling investment has continued to improve, there has been growing weakness in business investment,” CBA economists wrote in an update.

Businesses have also seen annual growth in their wage bills of 4.7 per cent, driven by an uptick in hours worked. However, according to CBA, wage growth remained low when considering the recent strength in the labour market.

Private non-farm inventories are set to contribute 0.3 percentage points to December quarter GDP growth, CBA calculations found.

According to Westpac, construction activity was softer than expected at 0.5 per cent in the December quarter.

“Public infrastructure has played an important role in supporting construction activity; a nascent recovery in private activity has also started to form across both infrastructure and residential construction,” Westpac said in its weekly report.

Private capital expenditure was a downside surprise, falling by 0.2 per cent in the December quarter and bringing the annual pace down to 0.6 per cent. Weakness was concentrated in the mining sector, which saw a fall of 0.6 per cent, compared to a decrease of 0.1 per cent across non-mining sectors.

Capital expenditure plans for 2025–26 reflected global and domestic uncertainty, according to Westpac.

On the global stage, US President Donald Trump announced that 25 per cent tariffs on Canada and Mexico will take place from 4 March, as well as an additional 10 per cent tax on China.

He has also indicated that European imports will face 25 per cent tariffs and that reciprocal, product-specific tariffs will follow.

Tariffs on China could impose costs on the Australian economy by weakening Chinese demand for Australian exports, Treasury has warned.

The White House’s specific mention of value-added taxes being included as “unfair, discriminatory, or extraterritorial taxes” as being a target for retaliation has worried some Australian economists that the GST could make Australia subject to retaliation.

According to Westpac, the RBA’s cautious approach to cutting interest rates is appropriate, however, it may pose risks to GDP growth. The banks expect that the RBA will wait for quarterly CPI data, released at the end of April, before they elect to make any further interest rate cuts.