The 2024 calendar year has, on reflection, presented challenges for businesses, with global influences, high inflation, and curbed consumer spending resulting in higher costs and reduced profits for many businesses.
On the upside, the Australian economy has come a long way in the fight against inflation – but we still have a long way to go
2025 outlook
If we look out to 2025, market sentiment reflections are:
- Inflation has fallen substantially since its peak in 2020, but it’s still a long way from the RBA’s 2.5% inflation target.
- The RBA does not expect inflation to hit its target until mid-2026.
- The Australia economy only grew by 0.8.% in past year – the slowest growth since 1990s outside of the Covid pandemic.
- Global events, including higher US tariffs, wars in Ukraine and Palestine, and weaker growth in China, are expected to continue to influence Australia’s growth rate.
- Government spending is likely to remain a key growth driver.
- The labour market is expected to remain strong for the first half of FY25, largely driven by government policies.
- We’re unlikely to see an RBA interest rate cut in February, with some economists predicting rates to remain stagnant until after the Federal election in May, with further rate cuts expected in the second half of the year.
With all the challenges businesses faced in the last year, I hope you were able to enjoy a well-earned break and refresh over the festive season. For those of you entering your business season, we hope all goes well.
As always, we encourage you to remain vigilant for scams and exercise care when transacting online or responding to email requests involving funds transfers.
If you need any assistance as a result of challenging circumstances, please reach out to your relationship manager who can work with you in this regard.
On behalf of the P&N Business Banking team, I look forward to continuing to support you as you embark on your business focus areas in FY 25.
Sincerely,
Jacqueline Ryan
Chief Business Banking Officer