Australia's growth outlook slows as crude oil prices surge

The International Monetary Fund’s latest World Economic Outlook projects Australia’s real GDP growth will decelerate to about 1.9% in the 2025‑26 financial year and 1.7% in 2026‑27. The slowdown is attributed to higher global oil prices and renewed hostilities in the Middle East, which are expected to keep inflation elevated and trigger further interest‑rate hikes.

Brent crude rose above US$78 a barrel after the United States declared a cease‑fire with Iran over, and subsequent attacks on vessels in the Strait of Hormuz have reinforced upward pressure on oil. Australia’s fuel‑tax rebate has been extended but at a reduced rate of 16 cents per litre. Consumer price inflation hovered at 4% in May, marking ten consecutive months above the Reserve Bank of Australia’s 2‑3% target, prompting officials to signal additional rate rises to preserve price stability.