OECD Warns of Sluggish Australian Economic Growth Amid Global Trade Concerns

0

Global economic growth is similarly anticipated to decelerate. OECD forecasts a reduction in growth from 3.2% in 2024 to 3.0% in 2026, attributing this trend to increased trade barriers among major economies and broader geopolitical tensions. The report specifically highlights that continued changes in trade policies, if maintained, could dampen global growth prospects and heighten inflationary pressures.

The potential slowdown has significant implications for both consumers and businesses within Australia. If growth rates dwindle, this could affect employment, wages, and investment levels across the country. Additionally, as higher trade barriers threaten global trade volumes, Australian exporters may face shrinking markets abroad, potentially putting additional pressure on domestic economic growth.

The report indicates that inflation, while expected to moderate gradually, could still surpass targets set by central banks, including the Reserve Bank of Australia. This poses a challenge for policymakers aiming to balance growth with inflation control. RBA Governor Michele Bullock emphasized the need to be vigilant against any resurgence of inflationary pressures in Australia.

: Experts suggest keeping a close eye on international trade developments, particularly the bilateral tariffs between major economies such as the US, Canada, and Mexico. If these tariffs were to be rolled back or applied more narrowly, it could lead to a more favourable growth and inflation outlook globally and in Australia.

The Reserve Bank of Australia has room to manoeuvre, given the current trajectory of moderating inflation. There’s potential for further interest rate reductions, which could stimulate domestic consumption and investment. Nevertheless, the caution remains as trade policy uncertainties continue to cast a long shadow over Australia’s economic future.

As policymakers navigate these challenging waters, strategic economic management will be crucial in cushioning Australia from external shocks and ensuring a steady growth trajectory amid a complex global landscape.

Published:Tuesday, 18th Mar 2025
Source: Paige Estritori

Share this news item:

Finance News

Clear

Markets Respond Cautiously to U.S. Tax Changes Amid Mixed Global Trends 23 May 2025: Paige Estritori Financial markets exhibited a measured response following the U.S. administration's introduction of new tax legislation, a development that is expected to significantly increase the national deficit. Despite initial positive momentum on Wall Street, much of the gains receded by the session's end. Similarly, European markets experienced mild selloffs, signaling uncertainty among investors. In Asia, a mixed response was seen, with Australia outperforming other regional markets, although with minor losses. - read more

RBA Rate Cut Sparks Concerns Amid Rising Housing Market Outlook 21 May 2025: Paige Estritori The Reserve Bank of Australia's recent decision to reduce the cash rate by 25 basis points to 3.85 per cent has stirred reactions among young Australians and financial experts. The decision provides relief for current homeowners but poses challenges for first-time buyers due to anticipated housing price increases. - read more

Investors Shift Focus to Hedged International Equity ETFs Amid Volatility 19 May 2025: Paige Estritori New insights from InvestSMART reveal a noticeable shift in investment preferences from Australian equity Exchange Traded Funds (ETFs) to global equity ETFs, particularly hedged international equity ETFs. This development comes in light of investors' efforts to guard against currency fluctuations. - read more

RBA Rate Cut Possible Despite Eased US-China Tariffs 19 May 2025: Paige Estritori Economists are largely forecasting that the Reserve Bank of Australia (RBA) will reduce interest rates during its upcoming meeting, although recent international developments add some uncertainty to this prediction. Notably, US President Donald Trump's decision to lower tariffs on China prompted a reciprocal tariff reduction by Beijing, leading to a rise in risk asset values, including shares. - read more

Australia Records Historic Fall in Disposable Income 16 May 2025: Paige Estritori Recent data from the Australian Bureau of Statistics (ABS) revealed a historical drop in real per capita household disposable income for Australians, marking an unprecedented fall of around 8% since mid-2022. This decline represents a significant issue, with Australia experiencing the largest decrease in the developed world, according to the OECD. - read more

Record High Australian House Prices Exceed $11 Trillion 16 May 2025: Paige Estritori Australia’s housing market has reached a significant milestone, with the total value of housing stock hitting $11.3 trillion as of April 2025. According to Cotality, formerly CoreLogic, the average home is now valued at $1 million, underscoring the considerable growth in property values. - read more

ASX Hits 11-Week High Amidst US-China Tariff Pause 14 May 2025: Paige Estritori The Australian Securities Exchange (ASX) reached its highest level in 11 weeks, buoyed by the announcement of a temporary pause in tariff increases between the United States and China. The ASX 200 index climbed 35.50 points, or 0.43%, to 8,269, with standout performances from the energy and information technology sectors. Similarly, the All Ordinaries index saw a rise of 43.70 points, or 0.52%, closing at 8,510.70. The Australian dollar also appreciated, gaining 0.71% to 64.16 US cents. - read more

AI Gaining Traction Among Australian Financial Advisers 14 May 2025: Paige Estritori A recent global survey conducted by the Financial Planning Standards Board reveals a growing trend among Australian financial advisers who see artificial intelligence (AI) as a beneficial tool. The study, which includes perspectives from advisers across 24 markets, highlights that approximately 82% of financial advice businesses in Australia are either currently utilizing, piloting, or planning to incorporate AI within the next year to enhance client services. - read more

ASIC Takes Legal Action Against Macquarie Securities Over Misreporting 14 May 2025: Paige Estritori The Australian Securities and Investments Commission (ASIC) has initiated legal proceedings against Macquarie Securities Limited, accusing the company of engaging in misleading conduct related to the misreporting of short sales. This lawsuit, filed in the NSW Supreme Court, points to a significant duration of alleged misreporting that spanned over 14 years, from December 2009 to February 2024. - read more

Wall Street Surges Following US-China Tariff Reduction Agreement 13 May 2025: Paige Estritori In a significant development, Wall Street's three major indices have leapt forward as the S&P 500 reached its highest point since March. This upwards trend follows the announcement of a temporary reduction in tariffs between the United States and China, offering hope for a de-escalation in global trade tensions initiated by US President Donald Trump in April. - read more