• Global growth is expected to remain relatively stable over the next 12 months with economic growth of 3.3% forecast;
• Australian economic growth is expected to remain subdued over the next four years with growth of 2.25% projected in 2025 and 2026;
• The Victorian economy continues to grow, despite the challenges of high inflation and elevated interest rates with its economy forecast to grow by 2.50% over the year to June 2025.

Economic Summary

Global growth is expected to remain subdued over the next few years as the effects of high inflation, restrictive macroeconomic policies, geopolitical tensions, and challenges in the Chinese economy weigh on the outlook. The Australian economy has slowed in response to the impact of global economic volatility. However, the domestic economy is well placed to face these global and local economic challenges, with moderating inflation, a resilient labour market, a return to annual real wage growth and strong business investment. The Victorian economy is performing well and continues to grow, despite the challenges of high inflation and elevated interest rates that are affecting the national and global economies.

Q1 2024 – Global Economic Overview

Global growth is expected to remain subdued over the next few years as the effects of high inflation, restrictive macro economic policies, geopolitical tensions, and challenges in the Chinese economy weigh on the outlook.

According to the IMF, global economic growth is forecast to increase by 3.2% this year before growing by 3.3% in 2025. If these projections are realised, this would represent the longest stretch of below-average growth since the early 1990s.

Global Economic Growth_Q2_2024

In the United States, projected growth was revised downward to 2.6%, reflecting the slower-than-expected start to the year before slowing further with growth is projected to ease to 1.9% in 2025.

In the Euro area, activity appears to have bottomed out with modest pickup in economic growth forecast underpinned by stronger consumption and higher-than-expected net exports.

For China, economic growth forecast is revised upward to 5% in 2024, with growth to slow to 4.5% and continue to decelerate over the medium term, adversely impacted from aging and slowing productivity growth.

Major Australian trading partner growth is also expected to remain subdued at 3.25% in 2024, 2025 and 2026 as a forecast softening in China offsets a modest pickup elsewhere.

Upside risks to inflation have increased, raising the prospect of higher-for-even-longer interest rates, in the context of escalating trade tensions and increased policy uncertainty. Market pricing implies that central banks in most advanced economies are likely to have reached the peak in their monetary policy tightening phases.

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