Navigating 2026

CEDA’s economists have recently delivered our national economic and policy outlook series to members across the country. Thank you to the panelists who joined us and to the many members who actively contributed to the discussions.

The themes shaping 2026 underscore the importance of CEDA’s Progress 2050 agenda - focused on the long-term reforms needed to lift productivity, strengthen resilience and secure sustainable growth. In a more volatile global and domestic environment, sustained structural reform will be critical to improving living standards over the decades ahead.

Here is what we are watching in 2026, and what it means for members.

The global picture: volatility without crisis

The global economy proved more resilient than many expected in 2025. Tariffs rates were lower and narrower than anticipated and supply chains adapted. But resilience does not mean stability. Geopolitical tensions, trade fragmentation and shifting major-power dynamics will continue to weigh on investment and business confidence in 2026. This environment places a premium on policy stability and strategic clarity.

For Australia, this means a more volatile external environment even if outright recession risks are contained. The outlook for China will remain critical for Australia, particularly for commodity demand and overall business confidence.

What this means for members: Global volatility is likely to remain a feature of the operating environment. Strategic planning may need to contemplate a wider range of external risks than in the past.

The domestic economy: modest growth, persistent inflation risk

Australian conditions strengthened heading into 2026, led by private-sector investment, particularly in data centres. In our discussions there were questions and concerns about a broader pick up in private investment.  Overall growth is expected to remain modest. The RBA forecasts GDP growth peaking at 2.3 per cent before easing to 1.8 per cent by end-2026 and 1.6 per cent through 2027. 

Inflation has reemerged as a central risk. Persistent price pressures in the second half of 2025 prompted the RBA to raise interest rates in early February. Whether this proves a one-off adjustment or the start of a renewed tightening cycle remains uncertain. Strong labour market outcomes and wages growth are welcome, but they also suggest demand is running close to the economy’s capacity. 

Key to future decisions will be the RBA’s assessment of whether recent drivers of inflation are temporary or more entrenched. While the current view is that many of the factors are temporary, it would not take much to shift the outlook, and businesses and households should be prepared for the possibility of further rises.

What this means for members: Plan for a slower growth environment and the possibility of further interest rate increases. This will influence consumer and business confidence, investment timing and financing conditions over the year ahead.

Productivity: the reform imperative

How do we expand the potential of our economy? The answer is productivity growth. After extensive discussion through the Economic Reform Roundtable and the Productivity Commission’s five pillars inquiries in 2025, 2026 must be a year of action. We will be looking closely to the May Federal Budget for meaningful reform signals.

The priorities are clear: reduce regulatory burden, enable a more seamless national economy, unlock the potential of data and AI, and pursue coherent tax reform. Productivity in the services and the housing construction sectors will need particular attention to lift our overall productivity performance. Structural spending pressures and forecast deficits will constrain fiscal flexibility and reinforce the need for growth-enhancing reform. Conversations around the Capital Gains Tax discount are a step in the right direction but should form part of a broader tax reform agenda. 

What this means for members: The case for sustained structural reform is strengthening, not weakening. Decisions taken in this reform cycle will fundamentally shape future competitiveness, investment settings, economic dynamism and long-term growth.

Immigration: evidence and long-term planning

Immigration was a hot topic across our economic outlook events and remains central to many current political debates. Getting policy settings right requires evidence-based, long-term planning that balances skills needs with housing, infrastructure and community expectations. 

What this means for members: This debate will remain economically and politically significant. The quality of migration policy design will have significant implications for skills availability, infrastructure demand and community confidence.

The bottom line

2026 calls for strategic clarity in an uncertain world. We look forward to continuing to work with members to advance the Progress 2050 reform agenda in 2026 and to discuss these important issues through our range of events and research. 

Members who attended a Navigating 2026 event will receive a copy of our economic outlook slide deck. Other members may request a copy by emailing research@ceda.com.au.