Australia is likely to experience a per capita recession, according to Tim Robinson, an associate professor at the Melbourne Institute of Applied Economic and Social Research. "GDP per person was set to contract for two straight quarters," Robinson said. "Growth is likely to be quite weak for the rest of the year, and because of that, a per capita recession is likely."

Consumer confidence in Australia is at around a 50-year low. Inflation in the country is about 4%, below the May budget's forecast peak of 5%. Unemployment stands at 4.4%.

Stephen Smith, a partner at Deloitte Access Economics, said, "At the same time, the three interest rate increases so far in 2026 mean that households with an average-sized mortgage have needed to find an additional $350 per month to meet higher repayments." House prices are falling in Sydney and Melbourne.

Robinson noted, "They [per capita recessions] are not as severe as a conventional recession – the changes in unemployment tend to be far less severe – but they do constitute a decline in living standards." Belinda Allen, head of Australian economics at CBA, said, "We think no more [Reserve Bank] interest rate hikes are needed, but we still see some lingering risks there."

Allen expects two interest rate cuts and an ongoing boom in datacentre construction to improve the economy in 2027. "By the time we get to 2028 we start to see these really interesting structural shifts," she said. CBA analysts project global oil prices will drop to US$60 by the end of the year.