Economic activity in Australia picked up in the final quarter of the year, with GDP growing by 0.6%, surpassing market expectations and marking the strongest performance since December 2022.
There remain concerns around the tightness of the labour market, geopolitical risks and trade barriers; meaning the RBA will remain cautious on further easing of the cash rate. Looking ahead, global and domestic economies face challenges, particularly from new US tariffs and retaliatory actions.
Australian overview
Australia emerged from a per capita recession with a 0.1% increase in GDP per capita for the quarter, despite being a 0.7% lower over the year.
Global landscape
Global growth looks weaker in 2025 and 2026. However, the global economic outlook is highly uncertain, affected by the ongoing trade war.
Summary forecast
* Values at end of period
# Actual values
^ Forecast values
KPMG forecasts of key macroeconomic indicators
| Indicator | 2024 (actual) | 2025 (forecast) | 2026 (forecast) |
|---|---|---|---|
| Real GDP (average annual growth) | 1.0% | 2.0% | 1.8% |
| Real GDP (year-ended growth) | 1.3% | 2.0% | 1.8% |
| RBA cash rate | 4.35% | 3.6% | 3.35% |
| Headline CPI | 2.4% | 2.9% | 2.6% |
| Core CPI | 3.2% | 2.9% | 2.5% |
| AUD/USD* | 0.64 | 0.62 | 0.62 |
Download the report
Full details about the Australian economic conditions and forecasts can be found in KPMG Australia's Economic and Outlook: Q1 2025.
Previous editions
Contact KPMG's Economics specialists
