OECD economic outlook tips miserly Australian GDP | Australian Markets

The OECD has downgraded expectations for growth in Australia’s financial system, urging the federal government to deal with the “housing affordability crisis” and speed up the transition to internet zero.

Australia’s financial system growth, measured by GDP, is tipped to succeed in 1.8 per cent in 2025, down from its March outlook of 1.9 per cent.

Tuesday’s OECD forecast of 2.2 per cent growth in 2026 had been barely higher than March interim determine of 1.8 per cent, nevertheless decrease than the two.5 per cent projected in December.

The worldwide physique urged the Albanese authorities to deal with “longer term” demographic, housing and climate challenges, as properly motion to make the tax system more environment friendly.

“A range of policy actions, including easing zoning restrictions, is needed to strengthen competition and productivity, as well as to raise housing investment to reverse the longstanding decline in housing affordability,” it stated.

The report additionally recognized each housing and reaching internet zero as key motion factors.

“Key structural policy priorities are to address the housing affordability crisis by boosting supply and to accelerate progress toward net zero carbon emissions, especially in transport and industry,” it learn.

“This should be complemented by other policies to strengthen investment, including improved incentives for house building, especially for social housing, and public investment to improve electricity grid connections.”

On tariffs, the OECD famous the influence of world trade tensions had worsened business and client sentiment, whereas Australia’s “exposure to US tariff increases is limited” with exports accounting for about 5 per cent of whole exports.

But it stated the home financial system might be hammered by dropping commodity costs.

The important sources of risk could be from import demand in China – Australia’s largest export market.

“The impact of global trade tensions on the Australian economy is more likely to come via the depressing effect of higher tariffs and policy uncertainty on investment worldwide, manifested in part by lower prices for iron ore, coal and natural gas,” it learn.

The OECD report moreover flagged that inflation “will remain close to target,” averaging 2.4 per cent throughout each years.

The “slump” in disposable incomes had additionally “bottomed out” and have been on the rise since late-2023, nevertheless had been considerably behind 2022 ranges.

Jim Chalmers stated the downgraded growth mirrored the “uncertainty, unpredictability and volatility” presently plaguing the worldwide financial system.

“This is a stark reminder of the risks posed by tariffs and trade tensions, conflict and fragmentation,” the Treasurer stated.

“We aren’t immune from all of this global uncertainty but we are well placed and well prepared because of the progress Australians have made together in our economy.

“With lower inflation, low unemployment, positive growth and falling interest rates the OECD is making it clear that the Australian economy is turning a corner as the rest of the world takes a turn for worse.”

Mr Chalmers additionally forecasted that Wednesday’s economic check-up would mirror the “global economic headwinds” in addition to the influence of a string of natural disasters which have hit Australia’s backside line by $2.2bn.

Australia’s GDP numbers for the March quarter, to be launched by the Australian Bureau of Statistics at 11.30am on Wednesday, is tipped to grow by a sluggish 0.4 per cent.