The RBA offers the most recent forecast for the Australian economy in its May Statement on Monetary Policy. Over the next two years it expects:
- GDP growth will improve - GDP growth will recover from 1.3% to 1.8% in 2024-2025 and will be stable throughout 2026-2027 at 2.2% supported by a recovery in consumption and public demand.
- Household consumption growth will recover in 2025-2026 to 2.2% and will continue to 2.6% at the end of 2026.
- Business investment will be very weak until late 2025, while a contraction in dwelling investment will improve at the end of 2026.
- The unemployment rate will rise to 4.3% throughout the 2025-2026 and 2025-2027 financial years. These forecasts remain with the estimate of ‘full employment’ of 4-5%.
- Headline CPI inflation is projected to decline for the rest of 2025 but will increase once household energy subsidies end. The forecast for trimmed mean inflation, which excludes this effect, indicates that underlying inflation will return to the target band by mid-2025 and remain steady at 2.6% until June 2027.
- Wages growth will decline steadily from 3.3% to 3.1% at the end of 2025-2026.
- Although export growth is expected to recover in 2025-2026, the terms of trade are expected to be negative until the mid of 2025.
RBA forecasts for the Australian economy (May 2025)
| % change over the year |
Dec-24 |
Jun-25 |
Dec-25 |
Jun-26 |
Dec-26 |
Jun-27 |
| Gross domestic product (GDP) |
1.3 |
1.8 |
2.1 |
2.2 |
2.2 |
2.2 |
| Household consumption |
0.7 |
1.4 |
1.9 |
2.2 |
2.6 |
2.4 |
| Dwelling investment |
2.5 |
2.2 |
1.8 |
1.7 |
2 |
2.2 |
| Business investment |
0.3 |
0.2 |
0.6 |
1.8 |
2.9 |
3.4 |
| Public demand |
5.6 |
5.5 |
4.6 |
4.2 |
3.1 |
2.8 |
| Gross national expenditure |
2.3 |
2.2 |
2.5 |
2.7 |
2.8 |
2.7 |
| |
|
|
|
|
|
|
| Imports |
5.8 |
1.3 |
3.1 |
3.9 |
4 |
3.4 |
| Exports |
1.7 |
1.4 |
1.5 |
1.8 |
1.7 |
1.7 |
| Terms of trade |
−4.8 |
−0.7 |
0.9 |
1.9 |
0.2 |
−2.1 |
| Real household disposable income |
1.9 |
3.3 |
2.6 |
2 |
2 |
2.4 |
| |
|
|
|
|
|
|
| Unemployment rate (qtr average, %) |
4 |
4.2 |
4.3 |
4.3 |
4.3 |
4.3 |
| Employment |
2.4 |
2.1 |
1.4 |
1.3 |
1.4 |
1.4 |
| Average wage rates (WPI) |
3.2 |
3.3 |
3.3 |
3.1 |
3 |
3 |
| |
|
|
|
|
|
|
| Trimmed mean inflation (CPI) |
3.3 |
2.6 |
2.6 |
2.6 |
2.6 |
2.6 |
| Headline inflation (CPI) |
2.4 |
2.1 |
3 |
3.1 |
2.9 |
2.6 |
