{"id":529806,"date":"2026-07-07T16:23:18","date_gmt":"2026-07-07T16:23:18","guid":{"rendered":"https:\/\/www.newsbeep.com\/il\/529806\/"},"modified":"2026-07-07T16:23:18","modified_gmt":"2026-07-07T16:23:18","slug":"recession-off-the-cards-but-australia-faces-dreary-outlook-economists-say-australian-economy","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/il\/529806\/","title":{"rendered":"Recession off the cards but Australia faces dreary outlook, economists say | Australian economy"},"content":{"rendered":"

Fears of a recession have fallen away, with economists saying that Australia is set to safely navigate the biggest global oil supply shock<\/a> in history even as they warn of sub-standard growth in the year ahead.<\/p>\n

The de-escalation of the Middle East conflict has been accompanied by a major retreat in global oil prices<\/a> back to prewar levels, essentially removing the worst-case scenarios contemplated before Donald Trump\u2019s wobbly ceasefire with Iran was announced in mid-June.<\/p>\n

Belinda Allen, CBA\u2019s head of Australian economics, said she had never thought a recession was likely, but that \u201cthe impact of the war on energy markets and the economy were less severe than we had anticipated\u201d.<\/p>\n

\u201cOil prices did not rise as much, and the cut to the excise tax blunted the impact on households.\u201d<\/p>\n

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After spiking as high as $US120 a barrel, global oil prices have now steadied at about $US72 a barrel, and CBA analysts see them dropping to $US60 by the end of this year \u2013 even as they recognise the high risk that the war flares up and again strangles traffic through the strait of Hormuz.<\/p>\n

While high inflation remains a major threat, it is falling \u2013 and at about 4% is well down on the May budget\u2019s forecast peak of 5%. Unemployment is up only slightly over the past three months at 4.4%.<\/p>\n

\u201cWe think no more [Reserve Bank] interest rate hikes are needed, but we still see some lingering risks there,\u201d Allen said.<\/p>\n

A major downturn may have been averted, but Tim Robinson, an associate professor at the Melbourne Institute of Applied Economic and Social Research, warned GDP per person was set to contract for two straight quarters.<\/p>\n

\u201cGrowth is likely to be quite weak for the rest of the year, and because of that, a per capita recession is likely,\u201d Robinson said.<\/p>\n

\u201cThey [per capita recessions] are not as severe as a conventional recession \u2013 the changes in unemployment tend to be far less severe \u2013 but they do constitute a decline in living standards<\/a>.\u201d<\/p>\n

Stephen Smith, a partner at Deloitte Access Economics<\/a>, said his firm had rarely had such a pessimistic outlook for the country\u2019s near term economic trajectory.<\/p>\n

That pessimism is mirrored among households<\/a>, where consumer confidence is at around a 50-year low as many Australians struggle to cope with substantially higher prices after years of above-average inflation.<\/p>\n

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\u201cAt the same time, the three interest rate increases so far in 2026 mean that households with an average-sized mortgage have needed to find an additional $350 per month to meet higher repayments,\u201d Smith said \u2013 warning the RBA could hike again next month.<\/p>\n

Falling house prices<\/a> in some parts of the country, most notably Sydney and Melbourne, are also weighing on sentiment and making Australians less likely to spend.<\/p>\n

While Allen also sees weak growth this year, \u201cthe good news is that 2027 looks a little better\u201d, she said \u2013 in no small part due to an expected two interest rate cuts and the ongoing boom in the construction of datacentres<\/a>.<\/p>\n

\u201cClearly that [datacentre building] is being constrained by capacity and energy demand requirements, but it will still add to the economy next year and the year after.\u201d<\/p>\n

Beyond that, the threats and opportunities of artificial intelligence loom as a gamechanger for the Australian economy<\/a> from late 2028, said Allen, who was hopeful the technology could prove the antidote to Australia\u2019s weak productivity.<\/p>\n

\u201cBy the time we get to 2028 we start to see these really interesting structural shifts. There\u2019s a lot of defence investment to come, but also NDIS cuts and a lot of uncertainty whether the two largely offset each other.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Fears of a recession have fallen away, with economists saying that Australia is set to safely navigate the…\n","protected":false},"author":2,"featured_media":529807,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[114,184,85,46],"class_list":["post-529806","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-il","tag-israel"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/529806","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/comments?post=529806"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/529806\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media\/529807"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media?parent=529806"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/categories?post=529806"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/tags?post=529806"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}