Australia’s economic struggles are far from over, with interest rates expected to remain at a 15-year high until late 2025, according to AMP chief economist Shane Oliver. Speaking on Tuesday, Oliver warned that households will continue to grapple with the cost of living as the nation faces its longest period of weak economic growth since the early 1990s recession.
Grim Outlook for Living Standards
New international data reveals Australians have experienced one of the steepest declines in living standards across the developed world. Oliver described the current environment as “a fairly tough economic time,” though he stopped short of calling it a recession comparable to the early 1990s. Persistent inflation continues to weigh on the economy, putting pressure on the Reserve Bank to raise rates further.
“That continues to put pressure on the Reserve Bank to raise interest rates. And in the meantime, economic growth is very, very weak,” Oliver told Sunrise.
Per Capita Recession and Productivity Challenges
Australia experienced a per capita recession lasting several years until early 2023. While recent interest rate cuts provided some relief, Oliver warned the economy is entering another challenging period. He highlighted a decade-long “productivity malaise” as a key factor, stressing that stronger productivity is essential to lift living standards and control inflation.
Oliver called for meaningful reform to reverse the trend, including reducing regulation, easing housing supply constraints, training more tradespeople, and allowing more skilled migration.
