The International Monetary Fund (IMF) cut its economic growth projections for Australia, with gross domestic product (GDP) growth rate now expected to come in at 2% in 2026, compared with the previous forecast of 2.1%, and 1.7% in 2027, down from the earlier forecast of 2.2%, according to a Tuesday report.

Global economic growth is projected to slow to 3.1% in 2026 and 3.2% in 2027, while global headline inflation is projected to rise modestly in 2026 before resuming its decline in 2027, assuming the conflict in the Middle East remains limited in duration and scope, according to the IMF's World Economic Outlook. Under this scenario, oil prices are expected to average $82 per barrel for 2026.

A longer or broader conflict, worsening geopolitical fragmentation, a reassessment of expectations regarding artificial‑intelligence‑driven productivity, or renewed trade tensions could significantly weaken growth and destabilize financial markets, IMF cautioned.

Australia's consumer price growth is projected to clock in at 4% in 2026 and 3.2% in 2027, exceeding most advanced economies.