IMF Executive Board Concludes 2025 Article IV Consultation with Australia
IMF News, February 15, 2026
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- Published: February 15, 2026
Overview
- On February 9, 2026, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Australia.
- The Australian economy is managing a soft landing. Growth picked up to 2.1 percent year on year in 2025Q3 after a weak 2024, as private demand gradually recovered.
- With the output gap narrowing, inflation declined steadily through 2025Q2, allowing monetary policy to be eased over the course of the year. Underlying inflation rose above 3 percent in 2025Q3.
- Labor market conditions are easing gradually after a period of tightness; the unemployment rate is 4.3 percent.
- House prices have rebounded as financial conditions eased, and new dwelling investment has begun to pick up.
Near-term Outlook and Projections
- Real GDP is forecast to have expanded by 1.9 percent in 2025 and to grow by 2.1 percent in 2026.
- Elevated global uncertainty will continue to weigh on external demand and the current account is expected to remain in deficit into the medium term.
- Inflation is projected to converge to the midpoint of the RBA’s 2 to 3 percent target range by the latter half of 2027.
- Wage growth is anticipated to moderate further, partially attributable to weak productivity growth.
Risks to the Outlook
- Downside external risks: global trade tensions, financial instability, and volatile commodity prices could dampen demand and employment.
- Domestic risks: persistent inflationary pressures from strong labor markets and constrained supply capacity; slower-than-expected domestic demand recovery could increase unemployment.
- Medium-term challenges: climate events and shifting global energy demand.
- Upside resilience: new trade agreements and greater regional integration could support resilience.
Executive Board Assessment and Policy Guidance
- Directors welcomed progress toward a soft landing and internal balance, noting uncertainties about residual excess demand and supply capacity amid weak productivity growth.
- Near-term macroeconomic policies should remain agile and responsive to external shocks.
- Monetary policy:
- Directors welcomed the Reserve Bank of Australia’s recent policy rate increase in response to the economic and inflation outlook.
- They supported the RBA’s data-dependent monetary policy adjustment in line with its dual mandate of price stability and full employment.
- They stressed the importance of continued vigilance given elevated uncertainty.
- They welcomed progress on the RBA Review recommendations, including efforts to improve policy communication and further strengthen central bank independence.
- Fiscal policy:
- Directors supported planned medium-term fiscal consolidation to help rebuild fiscal buffers and enhance external rebalancing.
- They encouraged comprehensive tax and expenditure reforms while protecting and prioritizing infrastructure investments to enhance productivity and support growth.
- They recommended improved fiscal coordination across the federation and regular monitoring of subnational fiscal positions.
- Financial stability and housing:
- Directors considered financial stability risks contained but stressed ongoing vigilance, oversight, system-wide stress-testing, and agile macroprudential adjustments.
- They highlighted the need for a holistic strategy to address housing supply constraints, emphasizing implementation of supply-boosting measures and tax reforms.
- Structural reforms:
- Directors underscored bundling and sequencing structural reforms to foster productivity, business dynamism, and labor mobility.
- Recommended actions include streamlining regulations, leveraging technology adoption, advancing labor market reforms, and continuing economic and trade diversification.
- On the green transition, Directors cautioned that related industrial policy should be narrowly focused to address market failures and generate positive externalities.
Key Economic Indicators (selected exact figures from Table 1)
- Real GDP (annual percent change):
- 2021: 5.4
- 2022: 4.2
- 2023: 2.1
- 2024: 1.0
- 2025: 1.9
- 2026: 2.2
- 2027: 2.3
- Domestic demand (annual percent change):
- 2021: 6.1
- 2022: 5.3
- 2023: 2.9
- 2024: 2.0
- Private consumption (annual percent change):
- 2021: 5.0
- 2022: 7.4
- 2023: 2.7
- 2024: 0.6
- 2025: 2.5
- 2026: 2.4
- Investment (percent of GDP) 1/:
- 2021: 23.4
- 2022: 23.8
- 2023: 23.9
- 2024: 24.5
- 2025: 24.3
- 2026: 24.1
- 2027: 24.2
- Private investment (percent of GDP):
- 2021: 18.1
- 2022: 17.8
- 2023: 18.4
- 2024: 18.6
- 2025: 18.7
- 2026: 18.8
- 2027: 18.9
- 2028: 19.0
- 2029: 19.1
- 2030: 19.2
- Output gap (percent of potential): 0.1
- Employment (annual percent change):
- 2021: 3.1
- 2022: 4.5
- 2023: 3.4
- Unemployment (percent of labor force):
- 2021: 3.7
- 2022: 4.0
- 2023: 4.3
- 2024: 4.4
- Wages (nominal percent change):
- 2021: 3.8
- 2022: 3.3
- Terms of trade index (goods, avg) and % change:
- Index: 2021: 103; 2022: 113; 2023: 104; 2024: 97; 2025: 95; 2026: 96; 2027: 94; 2028: 93; 2029: 92; 2030: 91
- % change: 2021: 9.8; 2022: -7.3; 2023: -6.9; 2024: -1.3; 2025: -0.7; 2026: -0.6; 2027: -0.4
- Consumer prices (avg):
- 2021: 6.6
- 2022: 5.6
- GDP deflator (avg):
- 2021: 8.2
- 2022: 2.6
- 10-year treasury bond yield (percent, avg):
- 2021: 1.6
- 2022: 3.6
- 2023: 3.9
- Mortgage lending rate (percent, avg):
- 2021: 7.3
- 2022: 8.7
- 2023: 8.8
- 2024: 8.0
- 2025: 7.9
- 2026: 7.7
- 2027: 7.6
- House prices (% change):
- 2021: 23.7
- 2022: -4.9
- 2023: 7.2
- House price-to-income, national median value (ratio):
- 2021: 7.8
- Estimated interest payments (percent of disposable income):
- 2021: 6.9
- 2022: 6.8
- 2023: 6.7
- Household savings (percent of disposable income):
- 2021: 13.2
- 2022: 5.8
- 2023: 4.6
- 2024: 4.7
- Household debt (percent of disposable income) 2/:
- 2021: 187
- 2022: 188
- 2023: 185
- 2024: 181
- 2025: 176
- 2026: 175
- 2027: 178
- 2028: 177
- Business credit (percent of GDP):
- 2021: 48.4
- 2022: 48.5
- 2023: 48.9
- 2024: 47.7
- 2025: 48.0
- 2026: 48.2
- 2027: 48.8
- 2028: 49.0
- 2029: 49.4
- General government (percent of GDP) — Revenue:
- 2021: 34.8
- 2022: 35.5
- 2023: 35.9
- 2024: 36.5
- 2025: 36.6
- 2026: 36.8
- 2027: 36.7
- 2028: 36.2
- 2029: 36.3
- 2030: 36.3
- General government (percent of GDP) — Expenditure:
- 2021: 44.1
- 2022: 39.3
- 2023: 38.2
- 2024: 39.8
- 2025: 39.6
- 2026: 38.7
- 2027: 38.1
- 2028: 38.0
- 2029: 37.8
- 2030: 37.7
- Net lending/borrowing (percent of GDP):
- 2021: -9.2
- 2022: -3.7
- 2023: -3.2
- 2024: -2.9
- 2025: -1.9
- 2026: -1.8
- 2027: -1.5
- 2028: -1.4
- Gross debt (percent of GDP):
- 2021: 57.9
- 2022: 52.8
- 2023: 50.0
- 2024: 51.4
- 2025: 51.5
- 2026: 51.2
- 2027: 51.0
- 2028: 50.6
- 2029: 50.1
- Net debt (percent of GDP):
- 2021: 33.3
- 2022: 30.4
- 2023: 31.6
- 2024: 32.9
- 2025: 32.8
- 2026: 32.5
- 2027: 32.4
- 2028: 32.2
- 2029: 31.7
- Current account (percent of GDP):
- 2021: 0.3
- 2022: -2.2
- 2023: -2.3
- 2024: -2.4
- Net international investment position (percent of GDP):
- 2021: -37.7
- 2022: -37.2
- 2023: -30.0
- 2024: -23.0
- 2025: -23.5
- 2026: -24.4
- 2027: -25.6
- 2028: -26.8
- 2029: -27.9
- 2030: -29.1
- 2031: -30.2
- Gross official reserves (bn A$):
- 2021: 81
- 2022: 85
- 2023: 107
- Nominal GDP (bn A$):
- 2021: 2,208
- 2022: 2,491
- 2023: 2,630
- 2024: 2,726
- 2025: 2,853
- 2026: 3,000
- 2027: 3,134
- 2028: 3,274
- 2029: 3,425
- 2030: 3,582
- 2031: 3,746
- Nominal GDP percent change:
- 2021: 11.6
- 2022: 12.8
- 2023: 3.67
- Real GDP per capita (% change): 0.9 (year listed)
- Population (million):
- 2021: 25.8
- 2022: 26.3
- 2023: 27.0
- 2024: 27.4
- 2025: 27.7
- 2026: 28.1
- 2027: 28.4
- 2028: 28.8
- 2029: 29.1
- 2030: 29.5
- 2031: 29.8
- Nominal effective exchange rate:
- 2021: 90.8
- 2022: 90.3
- 2023: 88.1
- 2024: 89.0
- Real effective exchange rate:
- 2021: 90.5
- 2022: 91.1
- 2023: 90.4
- 2024: 82.0
Source: IMF Executive Board press release concluding the 2025 Article IV consultation with Australia (Press Release No. 26/046, February 15, 2026).