The RBA offers the most recent forecast for the Australian economy in its February Statement on Monetary Policy. Over the next two years it expects:
- Growth outlook softens further: The RBA expects GDP growth to slow to around 1.6% by mid‑2027 onward. This marks a material downward shift in the medium‑term forecast.
- Household consumption growth is forecast to slow from 3.1% in late 2025 to 2.8% by mid‑2026, before falling further to around 1.7 by the end of 2027.
- Business investment is projected to rise from 2.5% in late 2025 to 3.7% in mid‑2026, before settling at a slower pace of around 2.4% by the end of the year and gradually dropping to 2.0% by mid‑
- The unemployment rate is expected to edge up from 4.2% in late 2025 to 4.3% in mid‑2026, before rising to 4.6% by mid‑2028-consistent with the RBA’s assessment of full employment around 4-5%.
- Headline inflation (CPI) is projected to increase from 3.6% in late 2025 to 4.2% by mid‑2026, before gradually easing back. Trimmed mean inflation will take three years to return to the mid-point of the target 2-3% band, the RBA’s inflation target.
- Wage growth is expected to slow from 3.4% in late 2025 to 3.1% through 2026, before easing further to 3.0% by mid‑2028 as labour‑market conditions soften.
Overall, these forecasts are a major downgrade, pointing to much lower growth and investment, and much higher inflation, than previously expected over the next twelve months.
RBA forecasts for the Australian economy (February 2026)
| % change over the year |
Dec 2025 |
Jun 2026 |
Dec 2026 |
Jun 2027 |
Dec 2027 |
Jun 2028 |
| Gross domestic product (GDP) |
2.3 |
2.1 |
1.8 |
1.6 |
1.6 |
1.6 |
| Household consumption |
3.1 |
2.8 |
2.1 |
1.9 |
1.7 |
1.7 |
| Dwelling investment |
5.5 |
3.7 |
1.8 |
1.1 |
0.3 |
−0.4 |
| Business investment |
2.5 |
3.7 |
2.4 |
2.4 |
2.2 |
2.0 |
| Public demand |
2.2 |
3.8 |
3.2 |
2.9 |
2.2 |
1.9 |
| Imports |
6.3 |
4.6 |
3.0 |
3.7 |
2.6 |
2.2 |
| Exports |
3.9 |
0.7 |
−0.4 |
1.5 |
1.5 |
2.0 |
| Terms of trade |
4.7 |
6.8 |
−0.4 |
−0.9 |
0.1 |
0.4 |
| Unemployment rate |
4.2 |
4.3 |
4.3 |
4.4 |
4.5 |
4.6 |
| Employment |
1.2 |
1.1 |
1.3 |
1.2 |
1.2 |
1.2 |
| Wage price index |
3.4 |
3.1 |
3.1 |
3.1 |
3.1 |
3.0 |
| Trimmed mean inflation |
3.4 |
3.7 |
3.2 |
2.8 |
2.7 |
2.6 |
| Headline inflation (CPI) |
3.6 |
4.2 |
3.6 |
2.9 |
2.7 |
2.6 |
