Economic Update

• Retreat of globalisation through constraining policies – tariff, migration, big, beautiful bill Act.

• US growth will slow – supply side constraints with slowing growth sets the scene for a return to stagflation.

• Implication for the rest of the world – negative supply shock. The world cannot sell as it once did into the USA.

• This has consequences for China which has invested heavily in manufacturing capacity and now has overcapacity – China will be looking to sell its products to other parts of the world, including Australia.

• Australia is close to target inflationary band, RBA is in a cautious easing position, however with unemployment holding, the economy is operating at full capacity.

• With demand for our coal, iron ore, gas potentially coming off, productivity is the key mechanism by which Australia will grow its national income and ensure prosperity for the Australian people.