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The Australian Economy in 2025–26: Domestic Challenges in an Uncertain International Policy Environment

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  • Matthew Greenwood‐Nimmo
  • Viet Hoang Nguyen
  • Tim Robinson
  • Sarantis Tsiaplias

Abstract

The Australian economy grew at a moderate pace in 2024–2025. Monetary policy gradually eased through 2025, with three rate cuts bringing the cash rate down to 3.6%. The labour market has softened further from its post‐pandemic state, but a resurgence of inflation in recent months places further monetary easing in doubt. Weak productivity growth remains a major domestic policy challenge. Geopolitical tensions, volatile tariff policies and the prospect of a stock market correction regarding the AI boom are downside risks heading into 2025/2026.

Suggested Citation

  • Matthew Greenwood‐Nimmo & Viet Hoang Nguyen & Tim Robinson & Sarantis Tsiaplias, 2026. "The Australian Economy in 2025–26: Domestic Challenges in an Uncertain International Policy Environment," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 59(1), pages 5-15, March.
    • Handle: RePEc:bla:ausecr:v:59:y:2026:i:1:p:5-15
    DOI: 10.1111/1467-8462.70049
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    References listed on IDEAS

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    2. Warwick J. McKibbin & Megan Hogan & Marcus Noland, 2024. "The international economic implications of a second Trump presidency," Working Paper Series WP24-20, Peterson Institute for International Economics.
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