Global Growth Stalls as Australia Battles Back: What the Latest OECD Economic Projections Reveal for 2025 and Beyond
OECD warns of a worldwide growth slowdown in 2025, but Australia is forecast to outpace most rivals with a promising rebound ahead.
- Australia’s GDP: Expected to rise 1.8% in 2025 & 2.2% in 2026
- Global G20 growth: Slowing to 2.9% for 2025 and 2026
- US growth: Set to decelerate to 1.6% this year
- Damage from extreme weather: $2.2 billion wiped off Australia’s economy
Are we at the edge of a global economic downturn? This week’s forecasts suggest a chill wind is blowing through major economies—even the US, UK, Germany, and Japan are bracing for below-average growth. Yet Australia, battered by wild weather and global uncertainty, appears poised to do better than most, with a brighter outlook just around the corner.
Is Australia Better Placed Than Other Major Economies?
While the United States is predicted to slip from last year’s rapid 2.8% expansion to just 1.6% in 2025, and countries like the UK, South Korea, and Canada look set for meager 1% gains, Australia’s economy is expected to outperform the pack. According to the OECD, Australia’s GDP should grow by 1.8% in 2025—well above the OECD’s 1.4% average among its 38 member states—and accelerate to 2.2% in 2026.
Even as the global economy slows, experts point out that Australia’s unique position—supported by strong trading relationships and resilience in key export industries like beef—could shield it from the worst.
What’s Dragging Australia’s Growth Right Now?
Australia’s economic engine nearly stalled in early 2025, clocking just 0.2% GDP growth in the March quarter—a sharp dip from the previous quarter’s 0.6%. Much of the pain came from Cyclone Alfred and epic floods in Queensland and northern New South Wales, which cut the nation’s output by an estimated $2.2 billion. Tourism, mining, and shipping suffered the brunt, revealing the country’s vulnerability to natural disasters.
Despite these setbacks, the underlying trend remains cautiously optimistic. While public spending had supported growth in recent years, a transition is underway as infrastructure projects wind down and governments urge the private sector to take center stage.
Q&A: What Are the Major Headwinds and Tailwinds Ahead?
Q: Will consumer caution continue to weigh on Australia’s recovery?
A: Australians are still wary, limiting spending at the start of the year, but analysts expect household incomes to rise in the second half of 2025, potentially boosting consumption and confidence.
Q: How do trade tensions play into the outlook?
A: Trade disruptions—spurred by ongoing US tariffs and unpredictable global policies—certainly add uncertainty. However, strong US demand for Australian beef suggests opportunities still exist, and the country is maintaining critical trade links.
Q: How is the outlook for other major economies?
A: China, the world’s second-largest economy, is slowing from 5% growth last year to 4.7% in 2025, while the eurozone collectively recovers slightly thanks to rate cuts by the European Central Bank.
How to Prepare for the 2025 Economic Landscape
The world is not out of the woods yet. According to the OECD, global G20 growth will limp along at 2.9% in both 2025 and 2026, after a decade defined by shocks—from COVID-19 to armed conflict and surging trade barriers prompted by high-profile US tariffs.
Businesses and investors would be wise to focus on adaptability, monitor household demand shifts, and keep an eye on Australia’s evolving trade policies. Both public and private sectors must work together for growth momentum to pick up speed later in the year.
Want to dive deeper into global trends? Explore more at The World Bank or stay informed via Australian Financial Review.
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Stay Ahead—Get Ready for the Rebound!
Action Checklist for 2025:
- Track quarterly GDP reports from the Australian Bureau of Statistics
- Watch government policy shifts toward private sector growth
- Monitor consumer sentiment and disposable income trends
- Follow global trade headlines and tariff updates
- Prepare business strategy for potential weather and supply chain impacts
Stay informed, stay resilient—and position yourself for Australia’s big economic comeback!