Breaking News
‘Slow Grind’ Ahead for Australia’s Economy in 2025
‘Slow Grind’ Ahead for Australia’s Economy in 2025
By Ian Rogers
Australia’s economy is set for a challenging 2025, as the interplay of high interest rates, inflation, rising unemployment, China’s economic slowdown, and global uncertainty under Donald Trump’s second US presidency shapes a complex year. Leading economists predict a slow recovery, with growth remaining below trend.
Recovery Will Be Gradual
Challenger chief economist Jonathan Kearns forecasts that gross domestic product (GDP) will pick up slowly as inflationary pressures ease, boosting consumer confidence and spending. “GDP growth will slowly improve as inflation dissipates and interest rate cuts take effect,” Kearns said, though he cautioned against expecting a quick turnaround.
Interest Rates to Fall, But Modestly
Economists anticipate the Reserve Bank of Australia (RBA) will begin cutting rates by mid-2025, most likely in May, as inflation moves closer to the RBA’s target range of 2–3% annually. Independent economist Nicki Hutley supports earlier rate cuts to provide relief for stretched borrowers but warns of limited reductions.
“We might see two or three rate cuts, but borrowers shouldn’t expect substantial relief,” Hutley said.
Inflation Easing into Control
Inflation, which has dominated economic discourse, is expected to ease further. The latest data shows annual inflation at 2.8%, its lowest level since mid-2021, but underlying inflation remains higher at 3.5%, above the RBA’s target. UBS chief economist George Tharenou predicts both headline and core inflation will moderate in 2025, supported by government energy subsidies.
Labor Market to Soften
After surprising strength in 2024, unemployment is expected to rise, reaching 4.3%, according to the RBA. Slower economic growth and reduced public sector hiring will likely ease labor market pressures, while wage growth is expected to decline from its peak.
China’s Slump Hits Australia
China’s faltering economy remains a significant risk for Australia, particularly for key exports like iron ore and coal. While AMP’s Diana Mousina expects Chinese stimulus measures to support moderate growth, Hutley is less optimistic, warning of ongoing weakness in demand.
Global Volatility Looms
The return of Donald Trump as US president adds uncertainty, with proposed tariffs on China potentially impacting Australia indirectly. Economists remain cautious but suggest Trump’s focus on market performance could temper his more extreme policies.
A Year of Cautious Optimism
Economists agree 2025 will bring modest improvements, with tax cuts, easing inflation, and real wage growth offering some relief. However, the slow pace of recovery means economic divergence between households is likely to persist.
“2025 won’t be transformative,” Kearns said. “But with inflation easing and rates falling, we’ll see gradual improvement.”
For more local news, click here.
Breaking News
The Long Way Home Writing Competition Launches for 2025
Breaking News
Reminder: Slow Down in School Zones as Term 1 Begins
Breaking News
Recognising Our Local Sporting Champions
Breaking News
Coalition Maintains Narrow Lead Over ALP During Australia Day Long Weekend: L-NP 52% cf. ALP 48%
Breaking News
Lismore Student Awarded Prestigious Scholarship to Pursue Academic Dream in Sydney
- Tweed Shire News2 years ago
A NEW TWEED HEADS
- Motoring News2 years ago
Toyota Supra: Get Ready For A Fully Electric Version In 2025
- COVID-19 Northern Rivers News3 years ago
Northern Rivers Local Health District COVID-19 update
- COVID-19 Northern Rivers News3 years ago
Northern Rivers COVID-19 update
- Northern Rivers Local News3 years ago
Fears proposed residential tower will ‘obliterate’ Tweed neighbourhood’s amenity and charm
- Health News4 years ago
COVID-19 Vaccination Clinic now open at Lismore Square
- COVID-19 Northern Rivers News3 years ago
Lismore Family Medical Practice employee close contact
- NSW Breaking News4 years ago
Vale: Former NSW prison boss Ron Woodham