Australia grapples with sluggish growth, high rates and AI-driven productivity push

Australia’s economy is expanding slowly, with the IMF projecting GDP growth of about 1.9% this year and 1.7% next year. Real wages have fallen in recent quarters and consumer confidence is low, even as unemployment remains low and business investment stays strong. The Albanese government is positioning artificial intelligence as a key lever to boost productivity, appointing Assistant Minister Andrew Charlton as a leading advocate and encouraging new data centres despite community concerns over energy, water and noise impacts. At the same time, leading economists warn that interest rates are likely to remain at a 15‑year high through late 2027, keeping pressure on households and limiting living‑standard improvements. The outlook points to a need for reforms such as deregulation, increased housing supply, expanded trade‑skill training and higher skilled‑worker migration to revive productivity and ease cost‑of‑living pressures.