Recession off the cards but Australia faces dreary outlook, economists say
News Source
β’Tue, 07 Jul 2026 15:00:06 GMT
π° What Happened
Economists say Australia will avoid a recession despite the biggest global oil supply shock in history. Oil prices spiked to $US120 a barrel during the Middle East war but have now dropped back to $US72. The de-escalation of the conflict after Trump's ceasefire with Iran removed the worst risks.
But consumer confidence is still at a 50-year low. Many Australians are struggling with high prices after years of above-average inflation. CBA economists predict oil could fall to $US60 by the end of the year. A cut to fuel excise tax also helped blunt the impact on households.
π The Backstory
The Middle East war that started in 2025 sent global oil prices soaring. Australia feared a recession as energy costs threatened to push up everything from petrol to groceries. The conflict between Israel and Iran drew in other nations and disrupted shipping routes.
A ceasefire brokered by Donald Trump in mid-June 2026 began to ease tensions. Oil prices fell back to pre-war levels. Australia's economy is now expected to grow slowly rather than shrink. But the pain of higher prices will linger for months as households continue to feel the pinch.
π― Why It Matters
The recession scare is over, but many Australians still can't catch a break. High prices for everyday goods mean family budgets stay tight and the economy will feel sluggish for a while longer.
Economists say Australia will avoid a recession despite the biggest global oil supply shock in history. Oil prices spiked to $US120 a barrel during the Middle East war but have now dropped back to $US72. The de-escalation of the conflict after Trump's ceasefire with Iran removed the worst risks.
But consumer confidence is still at a 50-year low. Many Australians are struggling with high prices after years of above-average inflation. CBA economists predict oil could fall to $US60 by the end of the year. A cut to fuel excise tax also helped blunt the impact on households.
The Middle East war that started in 2025 sent global oil prices soaring. Australia feared a recession as energy costs threatened to push up everything from petrol to groceries. The conflict between Israel and Iran drew in other nations and disrupted shipping routes.
A ceasefire brokered by Donald Trump in mid-June 2026 began to ease tensions. Oil prices fell back to pre-war levels. Australia's economy is now expected to grow slowly rather than shrink. But the pain of higher prices will linger for months as households continue to feel the pinch.
The recession scare is over, but many Australians still can't catch a break. High prices for everyday goods mean family budgets stay tight and the economy will feel sluggish for a while longer.