Measuring Australia's Economic Slack

ANZ Research estimates that while the Australian economy tightened in 2025, it is currently nearing an output balance. Potential GDP growth has structurally slowed to approximately 2% y/y.

Key Takeaways

• 1.Output gap models suggest the Australian economy tightened over 2025, but may be nearing balance in early 2026.
• 2.Potential GDP growth is estimated at ~2% y/y, indicating a structural slowdown compared to the 2.7% historical average.
• 3.Sub-2% GDP growth is likely required to unwind remaining excess demand pressures in the economy.

Table of Contents

• Comparison with the RBA's estimates
• Potential growth – current estimates
• Appendix

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