Westpac Economics Research Hub

Westpac Economics reports a complex outlook for the Australasian region, marked by cooling labor markets and significant fiscal shifts. In Australia, April 2026 data reveals employment falling by 18,600 and unemployment rising to 4.5%, yet the Westpac-Melbourne Institute Consumer Sentiment Index rose slightly to 83 amid temporary fuel price relief. The Australian Federal Budget for 2026-27 introduces pivotal tax reforms for housing and negative gearing, although Westpac warns the fiscal impulse remains expansionary, likely necessitating RBA rate hikes in August and September. Simultaneously, the housing market shows clear signs of stress, with home values in Sydney and Melbourne declining as homebuyer sentiment hits deeply pessimistic levels. Across the Tasman, New Zealand is struggling with a sharp energy price shock that has prompted Westpac to slash its 2026 GDP growth forecast to 1.5% and project a 3% OCR to combat energy-driven inflation. Globally, while trade tensions show signs of easing through high-level diplomatic meetings, massive data center investments are currently boosting CAPEX while temporarily dragging on broader productivity measures.