Deloitte Downgrades Australia’s Growth Outlook
Synopsis
The consultancy has lowered its forecast for Australia's economic growth to 1.3% for 2026–27, warning the economy is likely to remain below 2% annual growth over the next two financial years.
Deloitte has cut Australia’s economic outlook with its prediction of GDP growth at 1.3% in 2026-27, rather than the former-rated forecast of 1.9%, and warned the economy will be stuck below 2% annual growth for each of the next two financial years.
Deloitte’s latest every-quarter Business Outlook report says the period of sub 2% economic growth in Australia is set to be the longest since we exited the recession early last decade.
Higher rates and mediocre productivity hit growth
Deloitte Access Economics partner Stephen Smith said Australia had less clear water through the next six months due to persistent high interest rates and the ongoing oil price shock driven by conflict in the Middle East.
Years of underinvestment in housing, infrastructure, energy and productive capacity have left the economy unable to keep pace with demand even as strong population growth holds up overall economic expansion, but masks weak productivity.
Deloitte predicts headline inflation will stay higher than 4 per cent until the end of this year and expects the RBA to raise interest rates by 25 basis points in August.
Unemployment expected to rise
The company forecasts that the unemployment rate in Australia will average 4.9% in 2026–27, which may be as high as 5% later on as well.
On the whole, this means Deloitte expects Australia’s economy to rise 2.2% over 2025-26, 1.3% in 2026-27 and 1.9% over 2027-28; down from its previous forecasts of 2.4%, 1.9% and 2.0%.
The government will continue its work on growing the economy, boosting productivity and easing inflation and cost of living relief through tax cuts, wage increases, support for first-home buyers and expanding paid parental leave,’ Treasurer Jim Chalmers said.
Source: Capital Brief
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