Deloitte Access Economics: June 2026 Business Outlook

Oil prices may be off their recent peak, but rising interest rates, weak consumer and business confidence, stalling housing investment and a prolonged cost-of-living crisis have cut Australia’s growth prospects. 

In the June 2026 edition of Business Outlook, Deloitte Access Economics has slashed its forecast for real economic growth in Australia for 2026-27 from 1.9% to 1.3%. The economy is now expected to limp along at less than 2.0% annual growth for the next two years – including growth of just 1.1% over the year to December 2026 – the longest stretch of sub-2% growth since the early 1990s recession. 

Australia’s growth outlook has deteriorated over the past six months. The economy is still expanding, but growth has slowed and the outlook has become more fragile. Inflation has reaccelerated, interest rates have moved higher, and the oil price shock triggered by conflict in the Middle East is not yet fully resolved. 

To date, 2026 has revealed the vulnerabilities that have developed within the Australian economy over recent history. Australia is now structurally exposed in ways that have become hard to ignore.  

Deloitte Access Economics has rarely adopted such a downbeat assessment of the short-term outlook. 

For too long, strong population growth has masked a weak underlying productivity performance and lifted aggregate growth while doing less to improve living standards. Years of insufficient investment in housing, infrastructure, energy and the economy’s productive capacity have left the supply side of the economy struggling to keep pace with demand. 

The result is an economy more prone to inflation pressures at lower rates of growth. Meanwhile, the Middle East conflict has been another reminder that as a small open economy with a concentrated export base, Australia is highly sensitive to geopolitical disruption, shifts in global demand and commodity prices, and the security of trade routes. 

The interaction of geopolitical exposure, weak productivity, stretched household balance sheets and a constrained supply side was easy to overlook when interest rates were low, commodity prices were high and population growth kept aggregate growth ticking along. They are harder to dismiss now that inflation is sticky, investment needs are rising and the global environment is more uncertain. 

Deloitte Access Economics is forecasting one further 25-basis-point interest rate hike in 2026, before expecting the cash rate to be held at 4.60% for the following 12 months as inflation gradually moderates and returns to the Reserve Bank’s target range of 2-3%. This sustained period of high interest rates will place continued pressure on household budgets as the RBA attempts to dampen consumer spending in its fight against persistent inflation.      

With oil prices retreating to levels close to those seen before the Strait of Hormuz was closed, Australia – and the rest of the world – appears to have avoided a worst-case scenario. But with the focus turning back to the domestic environment, the picture is hardly reassuring. 

The economy is unlikely to gain momentum until households and businesses are more confident to spend and invest. Consumer spending is weakening as Australian households adjust family budgets to deal with the drawn-out cost-of-living challenges, while business investment remains subdued outside of data centre construction. 

Higher borrowing costs and ongoing economic uncertainty threaten the prospects of any short-term uptick in broad-based business investment. With current growth largely concentrated in machinery and equipment linked to data centre and AI infrastructure projects, forward indicators point to that growth dampening as investment plans become more selective amidst a volatile economic backdrop.  

Looking forward, the central question for the remainder of 2026 and beyond is the strength, breadth and durability of growth.