Australia’s treasurer remains optimistic about the nation’s economic future despite anaemic growth, as he considers new steps to fix the nation’s productivity.
Latest GDP figures show the economy grew by just 0.2 per cent for the first three months of 2025, weaker than economists were expecting.
Treasurer Jim Chalmers said even modest growth was welcome during a period of global economic instability.
“Growth was weak and soft in the March quarter but overall we are well placed and well prepared to deal with all of this global economic uncertainty that’s coming at us,” he told ABC Radio on Thursday.
“I remain optimistic about the future of our economy despite all of this global economic uncertainty.”
The growth figures released on Wednesday also revealed GDP per capita – a common measure of living standards – fell for the eighth quarter of the past nine.
Dr Chalmers said he was still confident about growth in the private sector and a boost in wages.
“The fact that we’ve had two interest rate cuts now means billions of dollars extra flowing into our economy,” he said.
“It also means the market is expecting there to be more interest rate cuts throughout the course of the year, and that would obviously provide some additional relief if that were to occur.”
The treasurer has flagged further measures to make Australia more attractive for investors as he looks to increase productivity.
Labour productivity – how much a worker produces in a given amount of time – fell one per cent in the year to March.
Dr Chalmers has identified fixing this as his primary priority in this term of government because in the long run, it’s the main driver of improving living standards.
Private investment in machinery and equipment fell 3.7 per cent over the last year.
More machinery and equipment per worker, also known as capital deepening, is one of the main contributors to productivity growth.
“My focus, including today, is how do we get that capital deepening that we want to see to make our economy more productive,” Dr Chalmers said.
“Foreign investment from trusted sources has a really important role to play there.”
It’s not all bad news, he said, with Australia having great human capital, political stability and deep renewable energy resources to leverage.
“There is a big global scramble for capital, and we will be a very competitive part of that.”
But tax and regulatory settings were holding back innovation and foreign investment in Australia, said EY chief economist Cherelle Murphy.
Business investment as a proportion of GDP has almost halved since the mining boom of the early 2010s.
“It is a warning sign that changed policy conditions are needed to boost the economy’s capacity and ability to cope with new challenges,” Ms Murphy said.
Dr Chalmers flagged more steps to attract investment, including further work to streamline approvals processes and cut back on regulation that gets in the way of important projects.
Australia’s long-standing trade deficit with the US resumed in April, as Australia’s trade balance weakened, the Australian Bureau of Statistics reported on Thursday.
After unusually high non-monetary gold exports drove an unprecedented $3.9 billion surplus over three months, a normalisation in the trade meant imports to the US once again outweighed exports by $1.7 billion.
This boosts the federal government’s case for tariffs to be lifted on Australian exporters, given – outside of the first three months of the year – Australia has run a deficit with the US since Harry Truman was president in the 1950s.
President Donald Trump has cited the need to address America’s trade deficit with the majority of its trade partners as a reason behind his widespread tariffs.
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