AUS
NZ
UK
CA
USA
FRA
GER
ESP
ITA
NLD
PRT
SWE
GRC
IND
POL
BRA
ZAF
RUS
CHN
UAE
Highlights
- Australia's GDP growth forecast for 2025 revised down to 1.8%.
- Elevated interest rates and potential US-China tariffs impact growth.
- Reserve Bank of Australia expected to ease rates earlier than market expectations.
Goldman Sachs has revised its 2025 growth outlook for Australia, citing potential "negative spillovers" from anticipated tariffs on Chinese exports by the incoming Trump administration. The firm now predicts a 1.8% rise in gross domestic product (GDP) for 2025, down from the earlier estimate of 2%. This revision highlights the economic risks stemming from Australia’s strong trade ties with China.
China, as Australia’s largest trading partner, faces proposed tariffs of 60% on exports to the United States, as stated by President-elect Donald Trump. These measures aim to bolster US domestic industries but are expected to affect global trade dynamics. Such developments could hinder Australian export performance, further pressuring economic growth.
Australia’s economy has already faced challenges in 2024, with elevated interest rates impacting consumer spending. The Reserve Bank of Australia (RBA) has maintained rates at a 13-year high of 4.35%, dampening household expenditure and slowing economic momentum.
Goldman Sachs projects the RBA will begin rate cuts in February 2025, a timeline earlier than many other market forecasts. By November 2025, the central bank’s rates are expected to reach a terminal level of 3.25%, according to Goldman. This contrasts with money market expectations, which anticipate the RBA’s easing cycle to start in May.
Economists at Goldman Sachs, led by Andrew Boak, emphasized that higher US tariffs on China could have broader implications for Australian monetary policy. They noted that this scenario strengthens the case for a more dovish stance by the RBA to mitigate potential economic headwinds.
This adjustment reflects broader uncertainty in global markets, where Australia’s reliance on commodity exports to China makes it particularly vulnerable to trade tensions. Companies exposed to such risks, including those in sectors like mining and resources, may face indirect effects on performance and growth prospects.
This forecast underscores the importance of monitoring shifts in trade policies and their ripple effects on the Australian economy. The interplay between elevated domestic rates, international trade challenges, and potential monetary easing forms a critical focus area for policymakers and industries alike.
