Treasurer Jim Chalmers has warned that the economy is heading for softer growth and slightly higher unemployment, in a speech to the Citi A50 Australian Economic Forum in Sydney on Friday 23 October.
He told the forum that Treasury was reworking its forecasts: “Treasury is in the process of revising all the numbers for the mid-year update.”
The Mid-Year Economic and Fiscal Outlook (MYEFO) is due in December, The Guardian reported. Friday’s figures came in a speech, ahead of that update.
“Higher interest rates and higher inflation are likely to mean softer growth and slightly higher unemployment,” Chalmers said, according to the Treasury transcript.
He went on: “Higher inflation is putting people under pressure, tighter monetary policy is weighing on domestic activity, and we can see that in the softening of the labour market.”
A Business Investment Upgrade
Chalmers paired the warning with better news. If MYEFO were released now, he said, it would print “a very substantial upgrade” for business investment.
Growth in business investment this year could more than double the May Budget forecast, from 2.5 per cent to over 5 per cent, according to the transcript. Last year’s outlook has been revised up from 4 per cent to 7.4 per cent. Across three years, Chalmers said, that would mean more than $50 billion in additional business investment.
He also said $87 billion in additional foreign investment was approved last quarter, taking approved investment for the year to $278 billion.
He told the forum: “In this sea of uncertainty and risk, Australia is an island of opportunity and stability.”
He also said: “You wouldn’t be here with your $27 trillion of capital if you disagreed.”
The Rate Backdrop
Chalmers noted that Australia’s 10-year bond yields had just reached a 15-year high, and that new consumer price index (CPI) figures are due on Wednesday 28 October.
Unemployment reached 4.7 per cent in September, the highest in nearly five years, The Guardian reported. The Reserve Bank raised the cash rate to 4.60 per cent in September, according to ABC News. Rates were moving the other way in May 2025, when the RBA cut the cash rate to 3.85 per cent.
On Wednesday 21 October, RBA Deputy Governor Andrew Hauser said the inflation outlook was “materially worse” than forecast, ABC News reported.
A day later, on Thursday 22 October, financial markets lifted the probability of a rate rise on Melbourne Cup day, Tuesday 3 November, to nearly 60 per cent, according to ANZ, as reported by The Guardian.
What Economists Say
Challenger chief economist Jonathan Kearns said the full impact of this year’s four rate rises had yet to flow through, The Guardian reported. He said: “We could be seeing unemployment at 5% and that will be a difficult threshold for the government.”
“Growth needs to slow. The RBA is facing an inflation challenge that’s worse than they thought it would be as recently as August,” NAB chief economist Sally Auld said, according to The Guardian.
Shadow Treasurer Tim Wilson attributes the prospect of a rate rise to the government’s “spending addiction”, ABC News reported.
“I think a lot of households are looking at it right now and saying, ‘We cannot bear any more’… It’s quite worrying,” Wilson said on 2GB on Wednesday 21 October, according to the ABC.
What Comes Before December
Two dates fall before the mid-year update. New CPI figures come out on Wednesday 28 October, and markets are weighing a rate rise on Melbourne Cup day, Tuesday 3 November.
The revised Treasury numbers are due with MYEFO in December.
More economy coverage is in Buzzline’s Business section.
Sources: Treasury Ministers, “Address to the Citi A50 Australian Economic Forum, Sydney”, 23 October 2026 (https://ministers.treasury.gov.au/ministers/jim-chalmers-2022/speeches/address-citi-a50-australian-economic-forum-sydney-0); The Guardian, “Economy set to worsen, with higher unemployment and weaker growth on the way, Jim Chalmers reveals”, 22 October 2026 (https://www.theguardian.com/business/2026/oct/22/jim-chalmers-economy-speech-rising-unemployment-inflation); ABC News, “Jim Chalmers declares optimism about business investment despite domestic gloom”, 22 October 2026 (https://www.abc.net.au/news/2026-10-22/chalmers-hails-boom-in-business-investment/107298274)
Photo: Commonwealth of Australia (Department of the Treasury), cropped, CC BY 4.0, via Wikimedia Commons.
Treasurer Jim Chalmers at the Jobs and Skills Summit at Parliament House, Canberra, in September 2022.
