Economic uncertainty in Australia is increasingly being shaped by geopolitical events, trade policies, inflation pressures and rapid technological change. At Moir Group’s recent webinar, Stephen Walters, Principal and Chief Economist at Optimal Economics, shared his perspective on the forces influencing the Australian and global economies and what business leaders should be watching over the next 12 months.
Geopolitics has become a core economic driver
Economic forecasting can no longer treat geopolitical risk as a secondary consideration. Trade disputes, global conflicts and changing regional relationships are now directly influencing markets, investment decisions and business confidence.
For organisations, this means preparing for a wider range of scenarios and building greater resilience into business planning and decision-making.
Australia’s productivity challenge is constraining growth
Productivity growth has averaged just 0.3% over the past decade, its weakest performance in more than 60 years. According to Stephen Walters, this has become one of Australia’s most significant economic challenges, limiting growth, contributing to weaker living standards and making inflation more difficult to manage.
Improving productivity remains one of Australia’s most important long-term economic challenges and will require greater investment, innovation and reform.
AI presents one of Australia’s biggest growth opportunities
While AI is creating uncertainty for some organisations, it also offers significant potential to improve productivity, support innovation and create capacity for higher-value work.
AI-related investment, particularly in digital infrastructure and data centres, is also emerging as an important source of economic growth, creating opportunities for both businesses and the broader economy.
Growth and cost discipline remain key priorities
With inflationary pressures, skills shortages and higher operating costs continuing to affect many sectors, organisations need to balance cost discipline with investment that supports long-term growth and competitiveness.
As businesses navigate an increasingly complex environment, identifying sustainable growth opportunities while maintaining strong financial discipline will remain critical.
What this means for business leaders
While uncertainty is likely to remain a feature of the economic landscape, Australia continues to benefit from strong trade relationships, valuable natural resources and a highly skilled workforce.
For finance leaders, CFOs and boards, the key challenge will be balancing risk and opportunity. Organisations that focus on productivity, innovation and adaptability will be best placed to navigate the years ahead.
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