
27/03/2025
Did you know, Australia’s economy is expected to grow by 2.25% over 2025 and 2026, with consumer spending and easing interest rates driving a cautiously optimistic outlook?
Thanks to NAB
Inflation is easing faster than previously forecast, with underlying inflation expected to fall back within the Reserve Bank of Australia’s (RBA) target band in the first quarter and reach the midpoint by Q3. Following the RBA's February 0.25% interest rate cut, NAB is now forecasting a full percentage point of rate cuts throughout 2025 to help sustain this momentum.
While growth is expected to improve, the outlook remains cautious. Consumer sentiment has been volatile, the labour market could tighten again, and global trade uncertainty, especially around US tariffs, may impact Australia’s trade with Asia. Consumer spending in Q1 was also somewhat weaker than forecast in late 2024; if households continue to focus on saving, this could dampen growth but may also help bring inflation down faster.
Still, businesses that act strategically could benefit. While younger households have felt more pressure from cost-of-living increases, older Australians, particularly Baby Boomers, have been relatively insulated. According to the Australian Bureau of Statistics, households led by those aged 65 and over reported only a 1.4% decline in discretionary spending during 2024, compared to a 4.7% drop for those aged 35-44.
Despite this, there are also signs of resilience among younger consumers. Although they’ve been more affected by rising costs, many young Australians continue to spend in categories like health, entertainment and digital services, often prioritising experiences over material goods.
This presents a clear opportunity for advertisers: targeting resilient sectors and demographics through smart, data-led campaigns. Brands that use real-time behavioural data and demographic insights will be better placed to adapt messaging, optimise media spend, and engage audiences with the greatest potential to convert as conditions improve.
For businesses, the message is clear: while operating costs may remain high, data-driven, strategic positioning now could put you in the best place to benefit from the next cycle of growth.
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https://business.nab.com.au/wp-content/uploads/2025/01/The-Forward-View-January-2025.pdf