{"id":565454,"date":"2026-03-26T11:04:08","date_gmt":"2026-03-26T11:04:08","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/565454\/"},"modified":"2026-03-26T11:04:08","modified_gmt":"2026-03-26T11:04:08","slug":"australian-growth-forecasts-slashed-as-global-economy-faces-inflation-spike-australian-economy","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/565454\/","title":{"rendered":"Australian growth forecasts slashed as global economy faces inflation spike | Australian economy"},"content":{"rendered":"

The world economy is on the brink of a major inflationary spike as soaring fuel prices threaten growth in European and Asian nations, the OECD has warned, and local economists are slashing Australia\u2019s growth prospects<\/a> for this year and the next amid the ongoing US-Israel attack on Iran.<\/p>\n

The Organisation for Economic Cooperation and Development\u2019s latest interim outlook said the US-Israel war on Iran<\/a> will \u201ctest the resilience of the global economy\u201d, and warned of the \u201csignificant downside risk\u201d to their forecasts should the oil supply disruptions prove more persistent and push energy prices even higher.<\/p>\n

The Paris-based organisation predicted inflation across G20 countries would reach 4% through 2026, or 1.2 percentage points higher than anticipated in December and before the US-Israeli bombing of Iran led to the closure of the strait of Hormuz.<\/p>\n

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The OECD<\/a> downgraded growth across the Euro area countries, the UK and South Korea by 0.4 to 0.5% for this year, versus its December forecasts.<\/p>\n

Energy exporters, including the US and Australia, would be less affected.<\/p>\n

The international crude oil benchmark was trading at $US104 a barrel in late Thursday trade, to be up more than $US40, or 70%, since the start of this year.<\/p>\n

The energy price shock has squashed this year\u2019s anticipated boost to global growth from the artificial intelligence investment boom, the OECD said.<\/p>\n

\u201cLonger-lasting closure of oil and gas production facilities in the region with damage to critical infrastructure or persisting disruptions to exports through the strait of Hormuz would be likely to have more significant adverse consequences than currently priced into world markets,\u201d the report said.<\/p>\n

Adelaide Timbrell, a senior economist at ANZ, said higher oil prices and climbing interest rates<\/a> would be a blow to Australia\u2019s growth in this year and the next<\/a>.<\/p>\n

Timbrell said Australia\u2019s growth rate would drop to 1.3% in 2026, or 0.5 percentage points lower than anticipated in February and only half of last year\u2019s growth.<\/p>\n

The effect of the Iran war on the economy would linger into 2027, with ANZ forecasting 1.8% growth in real GDP for next year: a \u201cmaterial downward revision\u201d from the 2.2% predicted before the outbreak of the war.<\/p>\n

Inflation would reach 4.9% by June \u2013 versus a previous forecast of 3.8% \u2013 and would end the year at a high 4.5%, instead of 3.4%.<\/p>\n

All of these forecasts assumed that energy prices would retrace some of their gains over the back half of this year, and assume that \u201cAustralia\u2019s fuel supply is sufficient to avoid mandatory rationing or widespread supply disruptions\u201d, Timbrell said.<\/p>\n

The chief economist at Barrenjoey, Jo Masters, said \u201cit\u2019s an inflation shock and a growth shock, but in the first instance it\u2019s an inflation shock\u201d.<\/p>\n

Masters said households, at least in aggregate, were in \u201cpretty good shape\u201d.<\/p>\n

\u201cThe savings rate is about $30bn a year higher than average, and Australians have been making additional mortgage payments.\u201d<\/p>\n

\u201cPeople will feel like their life is not as good, but they do have some buffers.\u201d<\/p>\n

The lead partner at Deloitte Access Economics<\/a>, Pradeep Philip, said it had become clearer that Australia was about to face a difficult period.<\/p>\n

\u201cYou can see the trajectory of unemployment going up and inflation going up; that trajectory is more visible now,\u201d he said.<\/p>\n

Despite the size of the oil supply shock, Philip said the country was not in the throes of 1970s-style stagflation, when inflation and unemployment hit double digits.<\/p>\n

\u201cBut people will feel the pressure of rising prices more than the official numbers would suggest, because some of the things they see every day will go up in price: petrol at the bowser, transport, food.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"The world economy is on the brink of a major inflationary spike as soaring fuel prices threaten growth…\n","protected":false},"author":2,"featured_media":565455,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[64,63,44],"class_list":{"0":"post-565454","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-australia","8":"tag-au","9":"tag-australia","10":"tag-news"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/565454","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=565454"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/565454\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/565455"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=565454"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=565454"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=565454"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}