Bank economists cut growth forecast to 1% as fifth rate hike looms
Major banks are halving growth forecasts to just 1% next year, citing Middle East oil costs and a collapsing property market.
The Reserve Bank is expected to raise interest rates for the fifth time this year on Tuesday, pushing the cash rate to its highest since 2008. CBA's head of economics said real growth would drop to just 1% by mid-2027, nearly half the previous estimate of 1.8%.
The outlook worsened because oil prices have climbed above $110 a barrel as Middle East conflict drags on. NAB forecasts unemployment could rise to 5.4% as the RBA fights inflation.
Home prices could fall as much as 15% before stabilising next year, with Sydney down 10% already. One economist warned recession risk would rise to as high as 45% should the RBA hike as expected on Tuesday.
- 1% by mid-2027
- New growth forecast
- 1.8%
- Previous forecast
- Above $110 per barrel
- Oil price
- 5.4%
- Unemployment forecast
Why it mattersRising rates and falling home values will squeeze household finances and slow the economy, affecting jobs and spending across the country.
AustraliaAustralian mortgage holders face another rate rise Tuesday, while property owners watch values drop and unemployment risk grows.
✓ Claims checked against the source and corrected before publish. checked 10 h ago
