The global economy is at an inflection point, where monetary policy may start to relax in the near term. However, it's not certain how much or for how long this will happen. Whilst headline inflation has seemingly been tamed, concerns remain over whether core inflation will follow the same downwards trajectory, or instead follow a shallower path within the next year due to sticky services inflation.
Australian overview
The Australian economy has halted at an aggregate level, as unbudgeted public demand increases.
- The June quarter 2024 national accounts painted a picture of an anaemic economy, and whilst the challenges are not necessarily visible in key headlines, the 0.2% quarterly real GDP growth was more tepid than expected.
- Household discretionary consumption fell 1.1% this quarter, while the household saving-to-income ratio remained the same at 0.6%.
- Taxes on production and imports rose 0.3%, with taxes on financial and capital transactions, land tax, and excise tax being responsible for most of this growth.
Global landscape
Central banks have generally commenced the easing of monetary policy settings, considering at or near target range inflation outcomes and macroeconomic weakness.
- KPMG expects global growth is forecast to decelerate from 3.1% average annual growth in 2023 to 2.9% in 2024
- The risk of economies tipping into recession has been the primary driver for numerous Central Banks to start easing policy rates down from their relatively high contractionary settings.
- Since the costs of servicing debt have increased due to higher interest rates, the fiscal position of many governments in advanced economies have been under pressure.
Summary forecast
KPMG forecasts of key macroeconomic indicators
| Indicator | Jun-23 | Dec-23 | Jun-24 | Dec-24 | Jun-25 | Dec-25 | Jun-26 |
|---|---|---|---|---|---|---|---|
| GDP (Real) | 3.2% | 2.1% | 1.5% | 1.4% | 1.7% | 2.2% | 2.3% |
| Inflation* | 6.0% | 4.1% | 3.8% | 3.0% | 2.7% | 3.1% | 2.8% |
| Unemployment* | 3.6% | 3.9% | 4.2% | 4.6% | 4.7% | 4.7% | 4.6% |
| AUD/USD* | 0.67 | 0.66 | 0.67 | 0.69 | 0.70 | 0.71 | 0.73 |
Full details about the Australian economic conditions and forecasts can be found in KPMG's Australian Economic and Outlook: Q3 2024.
