Australian Economic Outlook 2025: Industry leaders signal concern and urge policy shifts

According to the latest Australian Industry Group (Ai Group) industry expectations survey, industry leaders across Australia are notably pessimistic about the country’s economic prospects for 2025, with many scaling back on long-term investments in favour of short-term productivity measures.

Innes Willox (pictured), Chief Executive of the Ai Group, emphasised that the survey’s results should serve as a wake-up call to policymakers. He noted that without a significant redirection in policy, businesses critical to Australia’s economic future are likely to fall short of clean energy and housing construction targets, as well as face continued productivity and competitive challenges.

The survey, conducted just before Christmas, reflects concerns about the repetition of the previous year’s economic conditions—characterized by inflation, workforce and skill shortages and a prevailing sense of uncertainty.

“Driving productivity is seen as particularly difficult with the Government’s workplace relations measures being seen as a clear handbrake on making businesses competitive and wage rises sustainable,” Willox explained.

This year’s feedback from over 220 senior leaders from manufacturing, construction, technology and supply chain sectors reveals a sombre outlook: 44 per cent anticipate business conditions to weaken in 2025 compared to 2024, closely mirroring the sentiment from the year before, which recorded the lowest outlook since the end of the mining boom.

The survey outlines that controlling cost pressures from lingering inflation and high energy prices is a top priority due to their detrimental impact on business margins and profitability. Leaders are concentrating on near-term productivity through process improvement, skills upgrading and technology investments, though this focus shifts attention away from long-term objectives like research and development and international expansion.

Willox stresses the importance of these findings, suggesting that they underscore the need for policy adjustments to better equip businesses to navigate and thrive amid challenging economic conditions.

Picture: credit Ai Group