NAB's Chief Economist Alan Oster has told an audience of Lander & Rogers' people, clients and colleagues that he is optimistic about Australia's economic outlook in the medium term, although financial stress persists in certain areas and geopolitical risk poses uncertainty for the global markets.
Oster, who will shortly retire from his role as NAB's Chief Economist after 32 years in the role, joined Lander & Rogers in Melbourne for a special breakfast briefing presented to more than 300 guests, in which he shared key insights on the global and local economy. Oster highlighted:
- Global economic trends in 2024, revealing global growth outside of the US at 3.2% in 2024 and 3% forecast for the year ahead. While the US economy remained resilient in 2024, he said, it is now showing signs of slowing. Ongoing geopolitical risks and the prospect of tariffs imposed by the US on its trading partners are presenting considerable uncertainty in global markets, Oster said, although the full impact of these tariffs on the global economy remains unclear and will depend on how high they are and how other countries will respond.
- The Australian economy is showing signs of improvement. GDP growth in Australia hovered around 1% in 2024 — the weakest since 1991, excluding during the COVID-19 pandemic, due to high interest rates, rents and global economic softness. However, Oster expects growth to return to around 2.2% in 2025, with strong activity in the public sector leading the charge.
- Inflation is coming down faster than expected, with Oster predicting inflation to be at approximately 2.5% by the second half of 2025. Wages growth has also peaked, with Oster expecting it to gradually reduce to around 3.2% in 2025.
- A progression of interest rate cuts is on the agenda, with the RBA on "watching mode". Following a 0.25% rate cut in February 2025, Oster predicts further cuts each quarter until early 2026, when the terminal cash rate is expected to reach around 3.1% - offering some relief to businesses and borrowers.
- The labour market remains tight. While a bounceback in population growth has eased some labour shortages, high demand for skilled labour continues to pose a challenge. Currently at 4%, Oster expects the unemployment rate to rise slightly to 4.3% by mid-2025 before improving again.
Following his briefing, Oster was joined by Lander & Rogers partner Peter Kritikides, Lendlease chairman John Gillam and Bunnings Chief Customer Officer Rachael McVitty for a panel discussion on the risks and opportunities for business in the current economic climate. Panellists provided insights into their businesses and sectors, with both agreeing that pending interest rate cuts will provide some relief and boost consumer confidence, but that the potential impact of geopolitical risks remained front of mind for business leaders.
The 2025 economic breakfast briefing was one of a series of such events hosted by Lander & Rogers in partnership with leading economists. For more information and to attend future briefings in Melbourne and Sydney, contact events@landers.com.au
