Westpac with the forecast.
• Australia’s recovery stalled over the first six months of 2025, with the economy expected to have grown 0.4%qtr in Q2 and just 1.3%yr in six-month annualised terms – way below the RBA’s updated trend estimate of +2.0%yr.
• The extent of the pull back in public demand has surprised on the downside, while it’s become clearer that it will take time for investment and construction activity to pick up. This increases the chances of a ‘shaky handover’, and buildup of unnecessary slack in the labour market, in the near term.
• Productivity in the market (ex-mining) sector is expected to have grown 1.0%yr in Q2. As well as moderating growth in the sector’s unit labour costs to around 3.5%yr, this supports the view that whole-economy productivity growth will recover as the sector-specific factors in mining and the care economy wash out.
At this rate, the per capita recession will never end.
Falling living standards are Chicken Chalmers’s new economic model.
