Market Update: October 2025

We wanted to take a moment to share a straightforward update on how the Australian economy is tracking as we move through the back half of 2025 — what’s driving it, what’s slowing it, and what global events (especially in the U.S.) could mean for us here in Australia.

Let’s dive in.

1. Australia’s Economic Pulse

We’re in what I’d call a “steady but slow” recovery. The economy is holding up better than feared, but it’s not roaring ahead either — so realistic expectations are key.

The OECD expects Australia’s GDP to grow 1.8 % in 2025 and about 2.2 % in 2026, modest but positive [1].
KPMG’s June Quarter 2025 report showed GDP up 0.6 % for the quarter and 1.8 % year-on-year, the strongest since late 2023 [2].
Adjusted for population growth, GDP per person rose only 0.2 %, meaning the recovery feels slower for households [3].
The Australian Industry Group forecasts unemployment near 4.5 % and inflation easing back toward the RBA’s target band [4].

In short:
Australia’s economy is growing, just not quickly. That’s actually a sign of stability after a turbulent few years — we’re avoiding recession, inflation is coming under control, and the job market remains reasonably strong. For investors, that means the focus should remain on diversification, quality assets, and steady progress rather than chasing short-term gains.

2. The Trump Factor: What’s Happening Globally

The U.S. election result and Donald Trump’s return to office have injected a new dose of uncertainty into global markets — and that inevitably affects Australia.

The RBA’s Deputy Governor recently said Trump’s tariff policies “could have a profound impact” on Australia through trade and commodity channels [5].
Although Australia’s direct exports to the U.S. are modest, indirect effects (especially via China) are far more significant. If global trade slows, Australia’s resource exports can take a hit [6].
The ASX 200 recorded its biggest one-day fall in five years in April 2025 as investors reacted to Trump’s tariff announcements [7].
Some economists also warn tariffs could lift global inflation again by making imports more expensive, complicating central-bank policy [8].

Our take:
Global volatility is nothing new, but it’s a reminder that we should always plan for resilience as much as for returns. In practice, that means:

Staying diversified across markets and sectors.
Keeping sufficient liquidity in portfolios (especially for clients near or in retirement).
Reviewing exposure to currencies and offshore assets regularly.

3. Housing, Jobs, and Everyday Economic Health

Housing market

The housing story remains a mixed bag.

Nationally, prices are rising modestly, but growth is uneven between cities. Supply remains a major constraint [9].
Construction costs are still high, and U.S. trade tensions could push up material costs [10].
KPMG’s Outlook 2025 notes housing growth lags population growth, limiting affordability improvements [11].
Interest-rate relief later this year could provide some upside for buyers and investors, but most analysts expect a steady rather than surging market [12].

What that means for you:
For homeowners, this environment reinforces the value of manageable debt levels and flexibility. For investors, it’s about identifying good-quality assets rather than banking on quick capital gains.

Employment

Australia’s labour market remains solid but is cooling slightly.

The ABS reports unemployment near 4 %, still historically low [13].
The Australian Industry Group points out that job creation is slowing and wage growth has eased, which will likely keep inflation contained [14].
Skills shortages persist in key industries — especially construction, health, and technology — but demand is not as overheated as it was in 2022–23 [15].

Stable employment underpins consumer confidence, which is why we’re not seeing a major downturn in spending or housing.

Inflation and interest rates

Inflation has come down significantly from its peak, hovering in the 3–3.5 % range [16].
The RBA continues to signal caution but may consider rate cuts in 2026 if inflation continues to moderate [17].

That’s welcome news for borrowers, though we’re unlikely to return to the ultra-low rates of the pandemic era anytime soon. Investors should expect moderate inflation and interest rates to be part of the “new normal.”

4. What It All Means for Your Financial Plan

Let’s bring this back to you and your broader strategy.

Diversify. With moderate growth at home and global uncertainty abroad, spreading your investments across asset classes and regions remains the most reliable path to long-term success.
Stay liquid. Having accessible funds protects you from being forced to sell investments in volatile markets.
Manage debt wisely. If interest rates ease, steady, sustainable leverage beats stretching thin in uncertain times.
Keep super working efficiently. Tax-effective strategies inside super remain one of the best tools for building wealth.
Review estate and insurance planning. Economic uncertainty underscores the need for solid risk protection and clear estate structures.

5. In Closing

To sum it up:

Australia’s economy is stable but modestly slow-growing, with inflation under control.
Global risks (especially U.S. trade policy) are real but manageable.
The housing and jobs markets are holding firm, though we’re unlikely to see boom conditions soon.
The focus for investors should be balance, discipline, and long-term thinking.

In times like these, where progress is steady but uncertainty still lingers, the most powerful thing you can do is stay informed, stay focused, and keep your long-term goals in view. Economic cycles will always ebb and flow, but financial success comes from making consistent, thoughtful decisions rather than reacting to every headline. As always, our role is to guide you with clarity and confidence, so you can continue building the life and future that matter most to you and your family.

Endnotes

1. OECD Economic Outlook Volume 2025 Issue 1 – Australia Forecasts.

2. KPMG Australia Economic Outlook Q3 2025.

3. ibid. (GDP per capita analysis)

4. Australian Industry Group – Australian Forecasts (Feb 2025).

5. ABC News – RBA warns Trump’s tariffs could have a “profound impact” on Australia.

6. AdviserVoice – More Trump Tariffs and Deals.

7. The Guardian – ASX 200 Sheds $100bn in Biggest One-Day Fall in Five Years.

8. Reuters – Trump Tariffs to Slow Australia’s Economy but Recession Not Expected.

9. RSM Australia – Outlook for 2025: Australia.

10. Realestate.com.au – How the Trump Tariffs Could Sting Aussie Housing.

11. KPMG Residential Property Market Outlook (Aug 2025).