Domestic economic developments have largely played out as expected since the 2023–24 Queensland Budget. However, the outlook for the global economy remains subdued, with risks skewed to the downside.

The International Monetary Fund (IMF) projects global economic growth to slow from 3.5 per cent in 2022 to 3.0 per cent in 2023 and 2.9 per cent 2024, weaker than the 3.8 per cent per annum historical average.

National economic growth is expected to slow in 2023–24, weighed down by subdued growth in consumption and a slowdown in exports, according to the Reserve Bank of Australia (RBA). After growing 3.0 per cent in 2022–23, the RBA forecasts national GDP growth to slow to 1¾ per cent in 2023–24 before picking up to 2 per cent in 2024–25.

In Queensland, household budgets continue to be constrained by the substantial increases in lending rates and other cost-of-living pressures, which are expected to result in slower household spending growth in 2023–24. However, household consumption growth is expected to recover somewhat in 2024–25 as easing inflationary pressures help support real disposable incomes.  

With supply constraints continuing to ease, new housing construction activity in Queensland’s has rebounded recently. As capacity constraints unwind further and the substantial pipeline of construction work progresses, dwelling investment is forecast to rebound strongly in 2023–24 and grow at a modest rate in 2024–25. 

After growing by 2.7 per cent in 2022–23, Queensland’s state final demand growth is expected to remain steady at 2¾ per cent in 2023–24, before strengthening to 3 per cent in 2024–25. 

Despite the weaker global outlook tempering demand, an unwinding in supply constraints across the Queensland resources sector is expected to boost coal, LNG, and metals export volumes in the near term, while drier conditions are expected to increase short-term beef exports as processing rates increase. Services exports are also forecast to grow strongly as airline capacity increases. Further, goods imports are expected to moderate, in line with the softening in household spending and a sustained low A$ making imports relatively more expensive. 

The combination of these factors means that, after detracting from overall economic growth for 3 consecutive years, in real terms the overseas trade sector is forecast to make a solid contribution to overall economic growth in 2023–24. In 2024–25, the contribution from the trade sector is forecast to largely return to balance, as services export growth moderates. 

After growing by 2.3 per cent in 2022–23, overall economic growth is forecast to strengthen to 3 per cent in both 2023–24 and 2024–25. This profile is consistent with the outlook published in the 2023–24 Queensland Budget.

Softer household consumption in 2023–24 is expected to see year-average employment growth slow, from the strong 3.7 per cent in 2022–23 to 1¾ per cent in 2023–24, before growing a further 1¼ per cent in 2024–25. 

Reflecting the strength of Queensland’s labour market, the state’s unemployment rate averaged 3.7 per cent in 2022–23, in line with the Budget forecast. This was Queensland’s lowest year-average unemployment rate since 2007–08 and the second lowest on record since monthly ABS Labour Force estimates began in 1978. 

Queensland’s unemployment rate is forecast to edge slightly higher, from a low of 3.7 per cent in 2022–23 to 4¼ per cent in 2023–24 and 4½ per cent in 2024–25. However, these are still relatively low unemployment rates historically, compared with an annual average of 5.6 per cent over the previous 2 decades.

Consistent with national trends, inflation appears to have peaked, with annual growth in Brisbane’s Consumer Price Index slowing from 7.9 per cent in September quarter 2022 to 5.2 per cent a year later. However, reflecting higher fuel prices and a weaker A$, inflationary pressures, particularly for goods, are expected to persist for longer than anticipated at Budget. Consequently, after having peaked at 7.3 per cent in 2022–23, Brisbane’s yearaverage inflation is now expected to be 4¼ per cent in 2023–24, before moderating to 3 per cent in 2024–25.

Queensland’s Wage Price Index grew by 3.6 per cent in 2022–23, marginally below the 3¾ per cent forecast at Budget. Following strong growth in September quarter 2023, wages growth is expected to pick up to 4¾ per cent in 2023–24, before moderating in 2024–25 to 3½ per cent as capacity constraints in the labour market begin to ease. 

Combined, these forecasts for year-average wages growth and inflation imply that real wages will grow by half a percentage point in both 2023–24 and 2024–25.

Queensland’s population growth is expected to have strengthened to 2¼ per cent in 2022–23, reflecting strong overseas migration as departures have temporarily lagged arrivals. With interstate migration forecast to stabilise at around pre-COVID levels and net overseas migration to remain elevated, Queensland’s population is forecast to grow a further 2 per cent in 2023–24 before easing back to growth of 1½ per cent in 2024–25.

Table 1: Queensland economic forecasts¹

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