Treasury growth forecasts largely unchanged - house prices weaker

Treasury says while the conflict in the Middle East has delayed the country's recovery, it has not been derailed, with the medium-term outlook for the economy broadly unchanged from that in May's Budget.

In the economic forecast released in the Pre-election Economic Fiscal update or Prefu, Treasury says annual average growth will peak at 3 percent by March 2028, down slightly from 3.2 percent in the budget update.

Treasury says stronger economic momentum than first thought prior to the conflict, and a strong export sector has helped offset some of the negative impacts of rising oil prices, including weaker household consumption.

When it comes to business investment, increased uncertainty and cost pressure is expected to dampen activity in the June quarter before recovering in the later part of the year 2026, in line with the forecasts in the budget.