• The global economy is holding steady, although performances vary widely across countries with growth projected at 3.3% both in 2025 and 2026;
• The combination of higher interest rates, cost-of-living pressures and weaker global economic conditions has caused the Australian economy to grow more slowly over the past year than initially expected;
• The Victorian economy is forecast to grow by 2.5% in the 12 months to June 2025, driven by stronger household consumption, as inflation eases and employment and wage growth.

Economic Summary

The global economy is holding steady, although performances vary widely across countries. Growth in the United States economy has been stronger than expected and an outlier compared with other advanced economies. Australia has outperformed many advanced economies in recent years and is on track for a soft landing. The Australian economy is projected to continue to gather momentum through 2025 driven by a recovery in household disposable incomes supported by moderating inflation, continuing employment and wage growth. The Victorian economy is forecast to grow by 2.5% in the year to June 2025 supported by stronger household consumption, increased infrastructure spending and elevated business investment levels.

Q4 2024 – Global Economic Overview

The global economy is holding steady, although performances vary widely across countries. Global growth is projected at 3.3% both in 2025 and 2026, below the historical (2000–2019) average of 3.7%. Risks to the international outlook include rising global protectionism and strategic competition between the United States and China over global trade flows ongoing tensions in the Middle East and Ukraine.

Around three quarters of OECD nations have experienced at least one negative quarter of growth in the past 18 months. The Chinese economy is continuing to slow as cyclical and structural factors drag on growth. Growth in the United States economy has been stronger than expected and an outlier compared with other advanced economies. Growth rates in other advanced economies have been lower and are picking up only gradually.

Global Economic Growth

The United States has continued to outperform other advanced economies. Inflation has moderated without substantially affecting employment outcomes. Growth in the United States is expected to be 2% in 2025 and 2026. The growth outlook has improved in line with robust consumption and investment.

The Euro area is projected to experience modest improvements in growth in coming years with economic growth of 1.25% projected in 2025 and 1.5% growth forecast in 2026.Persistent structural challenges in German industry, political and trade uncertainties, and delays to fiscal consolidation in some countries pose significant risks to the outlook.

The United Kingdom is expected to post subdued growth through 2026, supported by higher public sector spending announced in the new government’s October budget, and a further expected easing in monetary policy.

China’s economic growth continues to moderate in line with the ongoing property sector downturn and mounting structural challenges. China’s economy is forecast to increase by 4.5% in 2025 and 4.25% in 2026 which if realised, would be the weakest consecutive three-year period of growth since China opened up to the global economy in the 1970s.

India is projected to remain the world’s fastest-growing major economy with growth of 6.75% forecast in 2025 and 6.5% projected in 2026.

Copyright © 2025 by Urban Property Australia All rights reserved. No part of this publication may be reproduced in any form, by microfilm, xerography, electronically or otherwise, or incorporated into any information retrieval system, without the written permission of the copyright owner.