Economic Outlook: What’s in store for 2024?

Andrew Hewison, Managing Director and Partner - 14 Feb 2024

In a world of economic uncertainty, we often look to the chief economists of Australia’s leading financial institutions for their insight into the shape of our economy and prevailing market conditions for the year ahead.

I must admit, when describing the role of ‘chief economists’, I enjoy the quote – “The role of a chief economist it to explain why the predictions of the previous 12 months, did not come true…”

In this blog I have summarised the views of three prominent sources, NAB, RBA, and Macquarie, into the economic landscape of 2024. Let’s delve into each perspective and compare their outlooks.


National Australia Bank (NAB):

NAB’s CEO Ross McEwan holds a cautiously optimistic picture of Australia’s economic prospects for 2024. McEwan acknowledges the challenges posed by inflation and the sharp rise in the cost of living. However, he believes Australia’s resilience and its ability to weather these challenges means Australia is well-placed to navigate the economic turbulence and emerge stronger.

McEwan believes we could now be at the top of the interest cycle, which would be a relief for many Australian households.

NAB believes the strength of Australia’s financial system and its potential to adapt to changing global dynamics, whilst dealing with the pressures of rising living costs, should provide confidence in our ability to manage these challenges.

NAB ultimately believes Australia is well placed to improve later in 2024.


Reserve Bank of Australia (RBA):

The RBA believes that various factors could all contribute to Australia’s economic performance, including inflation, employment trends, and global economic conditions.

On growth, the RBA believes the Australia economy will remain below trend in 2024 as cost of living pressures and higher interest rates continue to weigh on demand. That being said, they state that the economy has proven to be more resilient in recent quarters than expected.

The RBA acknowledges the presence of inflationary pressures but expresses confidence in its ability to manage them effectively. They have predicted inflation to decline to 3.5% by the end of 2024 and be below 3% by the end of 2025.

The RBA points to a softening labour market throughout 2024 which they believe will result in the unemployment market rising from 3.75% in Dec 2023, to 4.25% by Dec 2025.

According to the RBA’s analysis, Australia’s economic fundamentals remain robust, with strong employment growth and solid household spending. However, it also underscores the need for ongoing vigilance and prudent policy decisions to sustain economic stability.


Macquarie Bank:

Looking ahead to 2024, Ric Deverell, Macquarie’s Chief Economist, believes that global growth has been more resilient than anticipated over the past year, with inflation falling in most major economies.

While the risk of a deep global recession has moderated, Ric still expects growth to slow in early 2024 as the full impact of the long and variable lags of monetary policy is felt around the world. However, falling inflation will allow central banks to ease policy as the year progresses, setting the global economy up for a 2025 recovery.


How do their economic predictions compare?

Overall, all three institutions appear rather consistent with their messaging. They all suggest that our economy has avoided the overblown predictions of a potential ‘hard landing’, including recession throughout 2023.

They all now appear somewhat optimistic for an eventual recovery towards the end of 2024 and beginning of 2025.


Hewison Private Wealth comment

I will leave the predictions for Australia’s economy in 2024 to the ‘experts’. While these professionals get paid to provide a macro economic view, their definition of long-term can often be 6-12 months, whereas we characterise ‘long-term’ as being more like 3-5 years.

This is an important distinction when it comes to positioning one’s portfolio for the long-term. We often acknowledge that volatility can and will occur during shorter periods, however, when sentiment turns positive the impact on markets can be dramatic. For example, in the three months leading up to December 31 2023, the Australian share market rose around 10%, as investors began to see that we were reaching the peak of the interest rate cycle.



Listed share markets are incredibly efficient given the speed with which you can buy and sell. They are also forward looking, so while it may take most of 2024 to see our economy recover, many investors are already looking to position their portfolios for 2025 and beyond.


In closing, whether the institutions mentioned in this blog are correct, or not, the fact is macro-economic factors are unpredictable, so portfolios need to remain positioned for the long-term and be capable of weathering a storm, while prospering during economic tail-winds.

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