Australia: Australia’s economy is not technically in recession, but the pace of economic growth is weakening sharply. GDP grew by just 0.4 percent in the June 2026 quarter, while annual growth slowed to 1.8 percent. The biggest reason for the slowdown is the declining purchasing power of households. Inflation, high housing loans, rent, electricity and daily expenses have forced people to reduce non-essential purchases. This has directly affected shopping, restaurants, entertainment and small businesses. On the other hand, rising interest rates have made borrowing expensive for households and businesses. Government bond yields are also near their highest levels since 2011, increasing the cost of servicing the government’s debt. Economist Murphy Cruz estimates that household spending per capita will remain almost flat in 2026 and unemployment could reach around 5 percent by 2027. Australian economist Greg Jericho has also warned that the economy is already running at ‘half speed’ and further interest rate hikes could hurt growth. The biggest challenge that Australia is facing is to keep the economy from falling into recession by controlling inflation.
