Economic outlook

More about the NSW economy

    Key points

    • The outlook for the NSW economy is for a continued gradual easing in inflation without a significant deterioration in the labour market. This is broadly consistent with expectations at the time of the 2024-25 Budget.
    • Economic growth is likely to remain subdued in the near term. Momentum in economic activity is anticipated to recover over the course of 2024-25 as cost-of-living pressures ease.
    • Inflation has continued to ease as expected over the past six months, despite elevated services inflation, while the labour market has remained resilient.
    • Stronger-than-expected annual growth in state final demand in 2023-24 concealed a more pronounced slow-down towards the end of the financial year. This recent slowdown will weigh on forecast annual growth in 2024-25.
    • Risks to the outlook are currently centered on geopolitical tensions, possible US-China trade issues, and the potential that persistent inflation pressures could impact growth.

    A more detailed economic outlook can be found in Chapter 2 of the 2024-25 NSW Half-Yearly Review.

    New South Wales economic performance and outlook (a)

     

    		 2023-24 2024-25 2025-26 2026-27 2027-28
      Outcome Forecast Forecast Forecast Forecast

    Real state final demand

    		 1.5 ¾ (1¼)

    2¼

    		 2¼ (2½) 2½

    Real gross state product

    		 1.2 ¾ (2)

    2½ (2)

    		 2¼ 2¼

    Employment

    		 2.1  2(1)

    1½ (1)

    		 1½ 1½

    Unemployment rate(b)

    		 3.9 4½

    4½

    		 4¼ 4

    Sydney consumer price index

    		 4.3 3

    3 (2¾)

    		 2½ 2½

    Wage price index

    		 4.1 3½ (3¾)

    3¼ (3½)

    		 3¼ 3½

    Nominal gross state product

    		 5.3 3¼ (5¾)

    5¼ (4¾)

    		 4¼ (4½) 4½ (4¼)

    Population(c)

    		 1.7 1.3 (1.2)

    1.3 (1.2)

    		 1.2 (1.1) 1.2 (1.1)

    (a) Forecasts are rounded to the nearest quarter point and are annual average per cent change, unless otherwise indicated. 2024-25 Budget forecasts in parenthesis where different. Forecasts completed prior to publication of the 2023-24 Annual State Accounts by the Australian Bureau of Statistics (ABS).
    (b) June quarter, per cent.
    (c) Per cent change through the year to 30 June and rounded to the nearest 0.1 percentage point. The assumptions for net overseas migration are consistent with assumptions in the 2024-25 Australian Government Budget

    Source: Australian Bureau of Statistics (ABS) and NSW Treasury

    Last updated: 17/01/2025