Global Growth Stalls in 2025—but Australia’s Economy Poised for Unexpected Rebound Despite Shocks
OECD forecasts global growth to slow, but Australia remains ahead of most major economies—find out what’s driving this resilience.
- Australia’s GDP growth: Projected at 1.8% in 2025—higher than the OECD benchmark of 1.4%.
- Global slowdown: G20 economies forecast to grow only 2.9% in 2025, down from 3.3% last year.
- $2.2 billion: Estimated economic hit from Cyclone Alfred and major floods in Queensland & NSW.
- Eurozone recovery: Expected to reach just 1.2% growth by 2026, with rate cuts aiding momentum.
When global economies shiver, Australia rarely escapes without a scratch. This year, the headlines look bleak: major economies such as the US, UK, and Germany are bracing for even slower growth. However, Australia may have an ace up its sleeve—and experts say the “lucky country” is already showing signs it could outperform many rivals as soon as 2025.
A string of wild weather set the stage for a rocky start Down Under. Cyclones and floods in eastern states snatched some $2.2 billion from Australia’s economic output early in the year. Mining operations stalled, tourism slumped, and the shipping industry was left scrambling.
Yet, just as the outlook turned gray, new forecasts from the OECD have painted a surprisingly hopeful picture for Australia’s mid-term economic path.
Q: Is Australia Really Doing Better Than Other Advanced Economies?
Short answer: Yes, but the lead is slim. Australia’s GDP is expected to grow 1.8% in 2025—comfortably above the OECD’s 1.4% average, and faster than advanced economies such as the UK, South Korea, and Canada, all projected at around 1%. Germany and Japan are stuck in a growth rut, while China faces continual slowdown, dipping below 5%.
By 2026, Australia’s growth could top 2.2%—again beating the OECD average. Even as domestic consumption stays sluggish and public spending tapers off, Australia’s economic fundamentals are showing resilience many global peers lack.
Q: Why Is the Global Economy Slowing Down in 2025?
The culprit is a volatile mix of geopolitics and trade war whiplash. The OECD’s latest forecasts reveal that G20 economies will see growth stuck at just 2.9% in both 2025 and 2026. This is a sharp cooldown from 3.3% last year and over 3.4% pre-pandemic.
The trade conflict chaos—heavy import tariffs and retaliatory threats, especially from the US—has left international businesses and consumers wary. This uncertainty is freezing investment and shaking markets across continents.
Even China, the engine of global growth, is losing steam. Its growth will sink to 4.7% next year and 4.3% the year after, according to the OECD.
How Did Australia Weather the Recent Economic Storm?
Extreme weather events battered Australia’s economy in early 2025, clipping growth to a paltry 0.2% for the March quarter—much weaker than analysts expected. Shipping disruptions, mine closures, and a tourism downturn all left scars.
But as the rain clouds part, economists say pent-up demand and strategic government policies could fuel a rebound. Australian Bureau of Statistics figures show that although public spending—mainly on infrastructure—has slowed, sectors like exports are showing strength. Demand for Australian beef in the US, despite higher tariffs, has been eye-popping.
With international trade partnerships stabilizing and expected rebounds in real household disposable income, the foundations for growth are being laid.
Q: What Could Derail Australia’s Economic Recovery?
Several red flags remain. If the private sector can’t step up as government stimulus is wound back, the “handover” could get rocky. Household consumption is still weak, and living standards—as measured by GDP per capita—face downward pressure.
Global shocks haven’t vanished, either: the risk of new tariffs, inflation, or another round of extreme weather could threaten the nascent rebound.
How Can Australians and Investors Prepare for What’s Next?
Stay informed, diversify, and be ready for both volatility and opportunity. Monitor official guidance from the Reserve Bank of Australia and keep an eye on real-time developments from global media like Reuters and BBC.
Bottom Line: Australia’s outlook is brighter than most—but only if private sector momentum kicks in and global headwinds ease.
Ready to stay ahead of Australia’s economic curve in 2025?
- ✔️ Track quarterly GDP releases from the ABS
- ✔️ Watch global trade developments for new tariff announcements
- ✔️ Monitor household consumption and wage growth trends
- ✔️ Follow Reserve Bank updates on interest rate moves
- ✔️ Consider diversifying investments to hedge against ongoing global volatility
Don’t miss your chance to capitalize on the “lucky country’s” resilience—keep these action steps in your toolkit as 2025 unfolds.