Sep 8, 2026 – 4.06pmAustralia’s productivity problem is worsening and the economy is no longer capable of growing much faster than 1.3 per cent a year without generating inflation and forcing the Reserve Bank to raise interest rates, with rising costs helping to push business conditions into negative territory last month for the first time in six years.HSBC chief economist Paul Bloxham said the 0.2 per cent fall in productivity over the past year meant previous estimates that the economy could expand by just under 2 per cent a year may be too optimistic, with the RBA now unlikely to return inflation to its 2-3 per cent target range without at least one or two more rate rises.Subscribe to gift this articleGift 5 articles to anyone you choose each month when you subscribe.Subscribe nowAlready a subscriber? Fetching latest articles
Australia’s sluggish growth may still be too high to kill inflation
A 1.3 per cent ‘speed limit’ on the economy would be less than half the 2.9 per cent average annual rate of GDP growth in the two decades before the pandemic.
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