Wage growth lifts spending
Australia’s economy is projected to rise from 1.8% growth in 2025 to 2.4% by 2027, supported by wage growth and firmer domestic demand, according to United Nations forecasts.
The outlook, published in the World Economic Situation and Prospects 2026 report, places Australia among developed Asia-Pacific economies expected to record a pickup in activity from 2026. The UN estimates real GDP growth at 1.8% in 2025, compared with 1.1% in 2024, with growth projected at 2.2% in 2026 and 2.4% in 2027.
Earlier UN projections had already described 2024 growth as subdued across several developed economies entering 2025, providing the baseline for the subsequent improvement.
The report said wage growth has supported a recovery in private consumption, a factor contributing to domestic demand. Previous UN assessments noted that labour market conditions in developed economies remained firm through 2024, supporting nominal wage gains as inflation eased.
It added that private investment has remained relatively weak, even after the Reserve Bank of Australia began monetary easing policy commentary in February 2025.
Australia’s outlook sits within a global environment of moderated economic momentum. The UN forecasts global growth of 2.7% in 2026, down from an estimated 2.8% in 2025, before rising to 2.9% in 2027. These levels remain below the pre-pandemic average of 3.2% recorded between 2010 and 2019.
According to the report, a sharp increase in United States tariffs in 2025 created new trade tensions. However, the absence of wider escalation limited disruption to international commerce.
“Despite the tariff shock, global economic activity proved resilient, supported by front-loaded shipments, inventory accumulation, and solid consumer spending amid monetary easing and broadly stable labour markets,” the report said. It added that continued macroeconomic policy support is expected to cushion the impact of higher tariffs, while growth in trade and overall activity is likely to moderate in the near term.
In the United States, economic growth slowed to 1.9% in 2025 from 2.8% in 2024. The UN forecasts growth of 2.0% in 2026 and 2.2% in 2027, supported by expansionary fiscal and monetary policies. Inflation in the US is expected to remain above the 2% target in 2026 before moderating as tariff effects wane and housing costs stabilise. Earlier UN analysis noted that housing and other services prices contributed to slower disinflation across several developed economies.
Commonwealth Bank head of foreign exchange, international and geoeconomics Joseph Capurso said the bank expects stronger US growth than the UN projection. “We are more optimistic about the US economy in 2026 because of tech spending,” he said. He added that the bank forecasts US growth of 2.4% in 2026, compared with the UN’s 2.0%.
In China, the economy is projected to grow by 4.6% in 2026 and 4.5% in 2027, following an estimated 4.9% expansion in 2025. The UN cited a temporary easing of trade tensions with the United States, including targeted tariff reductions and a one-year trade truce, alongside policy support sustaining domestic demand.
