Australia’s economic recovery is slow and uneven but full of risk and opportunity

Australia’s economy is showing signs of life, but the recovery remains fragile and uneven. Productivity has slumped by 5 per cent over three years, a worrying signal for long-term growth and living standards. Retail spending is reaching record levels in some areas, yet other states and sectors continue to struggle. Businesses are under strain as rising costs outpace prices, while labour shortages and demographic shifts add further pressure. At the same time, artificial intelligence is beginning to make its mark, offering modest productivity gains that could become a catalyst for future growth.

Interest rates are expected to fall further this year, but market forecasts have often been overly optimistic in the past. The bigger challenge lies in deciding whether growth should continue to be supported by government spending, or whether the private sector needs to drive it through fresh investment, innovation and stronger leadership.

Economic cycles will always ebb and flow, but those who adapt quickly to structural change in technology, demographics and geopolitics will be best placed to shape the next phase of growth. The question for business leaders now is how to remain resilient, agile and ready to capture the opportunities that emerge from an uncertain recovery.