Victoria Downgrades Economic Growth Forecasts Amid Global Tensions
The state budget of Victoria has revised its economic growth forecasts downward for the next four years, citing the ongoing US-Israel conflict with Iran and the resulting increases in fuel prices and interest rates.
"High prices for fuel, fertiliser, and other industrial inputs are directly adding to the cost of doing business and the cost of living."
Revised Growth Outlook
- Real gross state product (GSP) is expected to grow 1.75% this financial year, down from a forecast of 2.25% in the December budget update and 2.5% in last year's budget.
- For 2026-27, economic growth has been downgraded from 2.5% to 1.5% .
- For 2027-28, the outlook has been trimmed from 2.5% to 2% .
Broader Economic Pressures
Budget papers state that high prices for fuel, fertiliser, and other industrial inputs are "directly adding to the cost of doing business and the cost of living," which will likely weigh on consumer spending on other goods and services.
Debt Challenges Intensify
The downgraded expectations further challenge Victoria's ability to manage its growing debt.