Contentious tax changes that have dented housing market activity could slow Australia's economy and deter the Reserve Bank from hiking interest rates again.
Fresh data is likely to show gross domestic product was still growing at a fairly rapid clip at the start of the year, but a slowdown is on the way.
Wednesday's national accounts release is likely to be the last time annual growth has a two in front of it for some time, which could convince the central bank to hold off on more rate rises.
Economists at National Australia Bank expect the Australian Bureau of Statistics to show the economy grew by 0.3 in the March quarter, which would put the annual growth rate at 2.4 per cent.
In May, the Reserve Bank predicted GDP to rise by 2.6 per cent.
NAB's forecast downgrade is largely the result of a sharp rise in imports, which resulted in Australia's first trade deficit since December 2017.
Imports surged on the back of higher fuel prices and the AI boom, NAB chief economist Sally Auld said.
The data centre build-out, which drove a massive increase in business investment, is highly reliant on imported server racks, while increased use of AI software also fuelled a rise in service imports.
Dr Auld said Wednesday's numbers were already "pretty historical".
The RBA's three rate hikes in 2026 and the flow-on effects of the Strait of Hormuz blockade will only be partially felt in the data, which covers January to March.
But it would provide a baseline for where the economy was before the Middle East conflict and the budget tax changes hit sentiment in the housing market, she said.
"Growth is clearly moderating, which would give the Reserve Bank confidence that they're on track in terms of getting a better balance between aggregate demand and aggregate supply," Dr Auld told AAP.
Westpac has also pencilled in growth of 0.3 per cent, while ANZ expects a slightly sturdier rise of 0.5 per cent and Commonwealth Bank has forecast a flat outcome.
If predictions of a slowdown from 0.8 per cent in the December quarter are accurate, it augurs ill for the rest of the year.
While some analysts, including HSBC chief economist Paul Bloxham, believe Australia is headed for at least one quarter of negative growth, Dr Auld said it was still too early to tell.
"It does feel like we've had quite a significant shift in housing policy as a consequence of what was announced in the budget, and that's clearly had a sentiment effect on the housing market," she said.
"The question we're mulling over is how big is the correction in housing likely to be, and what that might mean for activity; not so much in the current quarter, but possibly in the back half of the year.
"Does that present some downside risks to the economy from an activity perspective that maybe weren't there even just a month ago?"
Morgan Stanley economists have predicted property values to fall between 5-10 per cent.
Prices sank 0.9 and 0.8 per cent in Sydney and Melbourne, respectively, in May, according to Cotality.
Treasurer Jim Chalmers said any economic growth with a two in front of it would be welcome given the current circumstances.
"(It) would be a very welcome reminder that we confront this period of substantial global economic uncertainty and volatility from a position of genuine economic strength," he told reporters on Tuesday.
