Australia's economy has avoided recession, but economists warn of sub-standard growth in the year ahead. This was reported by Qazaqyia.kz citing The Guardian.
The de-escalation of the Middle East conflict has led to a retreat in global oil prices to prewar levels, removing worst-case scenarios considered before Donald Trump's shaky ceasefire with Iran in mid-June. Belinda Allen, CBA's head of Australian economics, said she never thought a recession was likely, but "the impact of the war on energy markets and the economy were less severe than we had anticipated."
Oil prices, which spiked to $120 a barrel, have steadied at about $72, with CBA analysts seeing a drop to $60 by year-end. Inflation is around 4%, well down from the May budget forecast peak of 5%. Unemployment has risen slightly to 4.4% over the past three months.
However, Tim Robinson, an associate professor at the Melbourne Institute, warned GDP per person is set to contract for two straight quarters. "Growth is likely to be quite weak for the rest of the year, and because of that, a per capita recession is likely," he said. Stephen Smith, a partner at Deloitte, said his firm had rarely had such a pessimistic outlook for the country's near-term economic trajectory.
Consumer confidence is at around a 50-year low as many Australians struggle with higher prices. Three interest rate increases in 2026 have meant households with an average-sized mortgage need to find an additional $350 per month. Falling house prices in Sydney and Melbourne are also weighing on sentiment.
Allen sees weak growth this year but expects improvement in 2027 due to two expected rate cuts and a boom in datacentre construction. She also believes artificial intelligence could be a gamechanger for the Australian economy from late 2028.