Australia's GDP projected to grow 2.1% in 2026: IMF

GDP growth picked up in the third quarter (Q3) of 2025 after a weak 2024, as private demand gradually recovered.

Labour market conditions are easing gradually after a period of tightness, although the unemployment rate, at 4.3 per cent, remains low by historical standards, an IMF release said.

The economic recovery is expected to continue in the near term.

Elevated global uncertainty will continue to weigh on external demand and the current account is expected to remain in deficit into the medium term.

Inflation is projected to converge to the midpoint of the central bank’s 2-3-per cent target range by the latter half of 2027 as pressures on service prices ease and import costs remain stable.

Wage growth is anticipated to moderate further, partially attributable to weak productivity growth, the IMF said.

Risks to the country’s economic outlook are skewed toward slower growth and higher inflation. External threats such as global trade tensions, financial instability and volatile commodity prices can potentially dampen demand and employment, while new trade agreements and greater regional integration could support resilience.

Domestically, persistent inflationary pressures may arise from strong labour markets and constrained supply capacity, the IMF added.

ALCHEMPro News Desk (DS)