In fact, the World Bank recently warned that global growth might slow to 2.3% in 2025, a significant percentage lower than expected at the start of the year.
Many of these changes have been attributed to rising global trade tension and policy uncertainty across regions.
Yet, amid these challenges, a few economies have managed to stand out.
Australia, in particular, has proven remarkably resilient, supported by a strong labour market, moderating inflation, and steady consumer confidence.
This article explores these factors and the many others contributing to Australia’s standpoint as one of the few thriving economies of today.
Overview of Australia’s Economy
Australia’s economy is one of the most advanced and resilient in the Asia-Pacific region, and this has been the reality for a long time.
The country has experienced 28 consecutive years of annual economic growth leading up to the COVID-19 pandemic, according to the IMF country report.
However, things took a less impressive turn following the pandemic, and Australia's development slowed significantly after that.
Following recent data, growth slowed to 1.5% in 2023-24, signalling its weakest points since the early 1990s.
2025 didn’t start off as its best year either.
In the first half of the year, the economy was characterised by weak underlying growth, especially in the first quarter.
In terms of figures, the economy slowed by 0.2% quarter-on-quarter (QoQ) growth.
However, the second half of the year came with some positivity, and there are reasons to believe Australia might be returning to its peak performances over the next months.
After a sluggish start to the year, stronger household spending and moderating inflation are beginning to lift activity across several sectors.
This view is equally mirrored by the Reserve Bank of Australia (RBA).
In a remark before lawmakers, RBA Governor Michele Bullock noted that “Australia’s economy is in a good place”, highlighting that the current adjustments in inflationary pressures and its resilient labour market are giving lawmakers the flexibility to adjust monetary policies accordingly.
Australia’s Q2 2025 GDP growth of 0.6% was the best and fastest expansion the country has seen since 2023, and has sparked conversations about its economic resilience among other world economies.
What’s Driving This Resilience?
Thriving Labour Market
Although unemployment remains near 4%, there is growing evidence that this momentum slowed in 2025.
Job growth was moderate in the second quarter of the year, and this trend continued into better performances for the economy.
This steady employment has done more than just keep people in jobs.
It has also helped maintain household incomes and consumer confidence.
Businesses, too, are starting to feel the lift.
With more people earning and spending, sectors like retail, construction, and services are seeing renewed activity.
Additionally, investment sentiment in forex trading, stocks, and other markets has also improved.
The RBA expects household consumption to continue improving as real income rises and cost-of-living pressures reduce.
Slowing Inflation and Price Stability
In a recent report by Reuters, the RBA noted that inflation is “back in the band”, meaning it’s returning to the midpoint of the bank’s target range of 2-3%.
Considering this standpoint, analysts believe that inflation is now easing.
This moderation is contributing to the economy significantly, especially in improving purchasing power and helping restore consumer confidence.
It could also significantly add to many of the benefits associated with lower inflation, such as higher asset values and improved investment demand.
For policymakers, it also means less pressure to keep monetary settings restrictive, a significant advantage as other economies struggle with persistent price pressures.
Trade Advantage
Australia has maintained a trade surplus this year, which has also contributed modestly to its economic growth.
Exports, especially in minerals, energy, and agricultural products, are performing well, providing businesses with the confidence to invest and expand.
We’ve also seen its relationship with key trading partners, such as China, grow stronger this year, especially with the US engaging in trade wars with these partners.
Diplomatic relations with China have stabilised and improved under the current Australian government, and these events have also contributed to restoring trust between the two parties.
That said, the RBA has been clear that some of these trade outlooks still carry risks.
For instance, a sharper slowdown in China, which is its largest trading partner, could weaken export revenues across its industries.
Future Economic Outlook for Australia
Even the strongest economies in the world have had some challenges in 2025.
So much so that the World Bank had to reduce its expectations for performance as the year comes to an end.
Australia’s position as one with better hope for its economy is impressive, and could be a good one to watch as we near the year’s end.
If you’re looking to start a business or invest in growing economies, the country could be an ideal place to start looking.
16°C