On Wednesday 18 March, Moir Group welcomed back Shane Oliver, AMP’s Head of Investment Strategy and Chief Economist, for our annual Economic Outlook event, held against an increasingly uncertain global backdrop.
In front of a full room at Chartered Accountants ANZ, Shane delivered his trademark blend of straight-talking clarity and expert insight, unpacking a global environment being shaped by overlapping risks across geopolitics, energy markets, inflation and structural challenges closer to home.
Five insights shaping the economic outlook in 2026:
1. Oil has re-emerged as the key global risk
While global growth remains relatively stable, Shane highlighted oil prices as the critical swing factor for markets. With around 20% of global oil supply passing through the Strait of Hormuz, any disruption has the potential to materially impact inflation, interest rates and growth.
“A sharp rise in oil prices flows through everything.”
While the global economy is less oil-intensive than in the 1970s, the scale of this disruption means the risk cannot be ignored, particularly if it persists.
2. Geopolitics is now driving economic outcomes
Since the GFC, and particularly post-pandemic, geopolitical tensions have become a dominant force shaping markets. The current conflict in the Middle East has added further uncertainty across global trade, energy supply and investment conditions. Shane also noted the possibility of a shift toward a more US-led global order, highlighting how quickly the geopolitical landscape is evolving.
3. Inflation remains persistent, and the policy path is uncertain
Inflation in Australia is still running above the RBA’s target, currently around 3.4% on an underlying basis, with higher fuel prices adding further pressure. This has already prompted further rate increases, with markets expecting more to come.
However, Shane cautioned that the path forward is not straightforward.
“The RBA is trying to avoid a repeat of the 1970s, but there’s a fine balance.”
Tightening too aggressively risks slowing the economy more than intended, particularly as higher oil prices also act as a drag on growth.
4. Australia faces ongoing structural challenges
Beyond the current cycle, longer-term issues continue to weigh on the Australian economy. Productivity growth has remained largely stagnant over the past decade, while public spending is sitting near record levels at around 28% of GDP.
At the same time, housing supply remains constrained, with an estimated shortfall of 200,000 to 300,000 homes nationally. Increased regulation has also extended construction timelines, further impacting affordability.
“These are the issues that will ultimately shape living standards over time.”
5. Volatility is likely, but markets tend to recover
With geopolitical uncertainty, elevated valuations and the US midterm election cycle underway, Shane expects continued volatility in the near term. Historically, this phase of the cycle has delivered below-average returns and periods of market correction.
However, he reinforced the importance of maintaining perspective.
“There’s always something to worry about, but over time, markets move through it.”
Opportunities continue to emerge globally, particularly across Europe and Asia, while longer-term themes such as AI are expected to support productivity and growth.
Final perspective
Shane closed by reminding attendees not to get lost in the noise.
While the current environment is complex and uncertain, history shows that markets and economies adjust over time. For business leaders and investors alike, the focus should remain on long-term fundamentals, including diversification, productivity and the power of compounding.
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