Recession off the cards but Australia faces dreary outlook, economists say
Summary
Economists say Australia is unlikely to enter a recession despite global oil shocks and a conflict in the Middle East. However, they warn the country will face slow economic growth this year, with weak consumer confidence and rising living costs affecting many households.Key Facts
- Australia avoided a recession despite a major global oil supply shock caused by Middle East tensions.
- Global oil prices dropped from $120 to around $72 per barrel and are expected to fall to $60 by year-end.
- Inflation is falling but remains around 4%, lower than earlier forecasts.
- Unemployment rose slightly to 4.4% over the last three months.
- GDP per person is expected to decline for two quarters, indicating a “per capita recession” and a drop in living standards.
- Consumer confidence is near a 50-year low due to high prices and inflation.
- Interest rates have increased three times early in 2026, raising mortgage repayments by about $350 per month for average households.
- Economic growth may improve in 2027, helped by possible interest rate cuts and growth in data center construction.
- Artificial intelligence and government investment in defense are seen as potential future economic drivers starting around 2028.
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