The mid-year economic outlook 2024

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An economic outlook for Australian businesses

After a complex few years for economies at home and abroad, it appears Australia is on track for a stronger 2025.

Mid-year insights on the Australian economy

In the year to date, Australia has faced a challenging set of economic conditions. At the moment, the economy is relatively soft, as the Reserve Bank of Australia (RBA) remains focused on reducing inflation and wage growth.

“That process does look like it’s working – inflation has come down,” says Macquarie Group’s Chief Economist, Ric Deverell.

“My guess is that the worst is probably happening about now. I think that as the tax cuts roll in in the second half of the year, growth will start picking up again and 2025 will feel much better than this year.”

For the Australian economy, there are two important variables for the months ahead: inflation and the labour market.

1. Taming inflation

The RBA will need inflation to move closer to its target range of 2-3% before it can comfortably start cutting the cash rate. As it stands, the cash rate is at its highest since November 2011.

It’s important to know that in the months ahead, with inflation being a key driver of the RBA’s decision making, further cash rate rises can’t be entirely ruled out.

Overseas, central banks have begun easing. The European Central Bank (ECB) began lowering its cash rate in June with a 25 basis point cut. On the other side of the Atlantic, the Bank of Canada also announced a 25 basis point cut.

The action taken by these two banks suggests that globally, the worst of the recent economic slowdown has passed, Deverell says.

“That will mean that a headwind that we’re facing at the moment, by 2025 will turn into a tailwind,” he says. 


“That will mean that a headwind that we’re facing at the moment, by 2025 will turn into a tailwind.”

Ric Deverell

Chief Economist, Macquarie Group

2. Eyes on unemployment

As Australian business leaders and owners are well aware, the Australian labour market has been tight in recent years, with attracting and retaining talent being a core business challenge.

However, unemployment has increased in the past year. A material increase in unemployment could bring the RBA into play as well, says Deverell, and it’s one of the key variables to watch carefully as the year progresses.

In its May statement on monetary policy, the RBA noted that unemployment is expected to continue climbing until the middle of 2025.1

Looking ahead

Despite current conditions in the Australian economy, the groundwork for a recovery and stronger year ahead has been laid.

“The Australian economy has had a difficult period. We had too much inflation, central banks had to tighten policy. That has slowed growth down and there’s no doubt that people are feeling a lot of pain,” Deverell says.

“I do think that slower growth is allowing wages to come into line with what we need for the central bank’s inflation targets. So I think the worst is probably behind us” he says. "I do think you can look forward to a better year next year,” he says.


“I do think you can look forward to a better year next year.”

Ric Deverell

Chief Economist, Macquarie Group

Your business needs 

We hope our insights help support your ambitions, as we move through 2024. At Macquarie Business Banking, we’d welcome the opportunity to speak with you as you navigate this shifting environment.

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Additional information

1 Statement on Monetary Policy, May 2024, Reserve Bank of Australia (



The information in this article was finalised on 27 June 2024.

This article has been prepared by Macquarie Business Banking, a division of Macquarie Bank Limited ABN 46 008 583 542 AFSL and Australian Credit Licence 237502 for general information purposes only, without taking into account your personal objectives, financial situation or needs. Before acting on this general information, you must consider its appropriateness having regard to your own objectives, financial situation and needs. The information provided is not intended to replace or serve as a substitute for any accounting, tax or other professional advice, consultation or service and nothing in this article shall be construed as a solicitation to buy or sell any financial product, or to engage in or refrain from engaging in any transaction.

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