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Global economic growth is slowing and projected to remain below the long-term average, driven by increased uncertainty from protectionist trade measures, geopolitical tensions, and shifting global dynamics - particularly from the re-election of Trump and ongoing tariff threats. These factors are impacting supply chains, investment confidence, and currency stability, with flow-on effects for Australia’s economic growth and trade performance. China remains Australia’s top export destination, but broader trade volatility and inflation expectations in major economies like the U.S. signal a challenging external environment.
Domestically, Australia has avoided recession despite high interest rates, but growth remains sluggish and unemployment has slightly increased. Inflation appears under control and wages are starting to rise, although business investment is weak. Public sector spending has played a crucial role in sustaining economic activity, while consumer sentiment has modestly improved from pandemic lows. Labour productivity remains a concern, and housing delivery continues to fall short of national needs, with high house prices and rents persisting and dwelling approvals remaining low.
The economic backdrop underscores the need for coordinated policy and investment to stimulate sustainable growth. In particular, growth areas must be empowered to deliver more housing and infrastructure, supported by a stable investment climate and government intervention where market activity is insufficient. The presentation concludes with a call to ensure economic prosperity is broad-based, reinforcing a strong social compact alongside a resilient economy.
