Australia’s Economic Landscape

Australia’s Economic Landscape: Disinflation, Fragile Growth, and the Case for Gradual Easing

As we enter the second half of 2025, the Australian economy is navigating a delicate transition. The post-pandemic recovery has given way to a period of stagnation, with GDP growth soft, inflation broadly back within target, and the labour market loosening, but not cracking. Monetary policy, once firmly in restrictive territory, is now cautiously easing. Markets are pricing ~88 basis points of cuts through March 2026, and the Reserve Bank of Australia has already delivered the first two. But how aligned is this with the data?

Below, we walk through the key macro indicators shaping this path, charting out the inflation fight, labour dynamics, consumption drag, and business resilience. Together, they suggest an economy that has weathered the storm of higher rates, but remains vulnerable to policy missteps or global shocks. A soft landing is still plausible, but not guaranteed.

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