Australian Economy Forecast for 2026: Interest Rates, Inflation, Crypto, AI, Gold, and Silver
The ASX 200 gained 6.8% in 2025 but ended the year over 4% below its October 21 record high of 8714.3. Investors have shifted from expecting rate cuts to anticipating possible hikes, with two of the four major banks expecting a February Reserve Bank of Australia (RBA) rate rise and none foreseeing further cuts.
Global equities are forecasted to rise in 2026 despite ongoing geopolitical risks, including tensions between Beijing and Taiwan and a United States oil blockade of Venezuela. Markets continue to be sensitive to supply-chain disruptions.
Concerns about an AI bubble persist. Gains driven by AI in the US technology sector contrast with Australia’s market, which is led by resources and banking. UBS has warned of bubble risks, while David Bassanese of Betashares suggests the market may be in the early to middle stages of a potential AI bubble.
Cryptocurrency assets have cooled following fears of a bubble. Actions such as tariff announcements by then-President Trump in April contributed to a dip. Data from Finder indicates that about one in four investors under 30 are active in the crypto market.
Precious metals like gold and silver have strengthened notably in 2025, with gold rising approximately 70% and silver over 150% in US dollars. These metals are viewed as safe havens amid uncertainty. Investor demand remains strong, supported by Australia’s significant gold deposits and silver production, suggesting potential for further upside.
Three main themes are expected to shape 2026: sticky inflation, ongoing geopolitical risks, and resilient demand for precious metals. Uncertainties remain about whether inflation can moderate without additional monetary restraint and further interest rate hikes.
