Chalmers Signals Weaker Growth and Higher Unemployment Ahead

Treasury is revising all the numbers for the midyear budget update as the economy is set to worsen, with higher unemployment and weaker growth on the way, Jim Chalmers has revealed. The warning points to a more difficult six months ahead, with economists cautioning that conditions will deteriorate further.

The revision covers the full set of forecasts that underpin the midyear budget update, meaning the government's official outlook for growth and the labour market is being rewritten rather than adjusted at the margins. The direction of travel is clear: weaker growth and a rising jobless rate.

The disclosure comes as economists warn of a difficult six months ahead for the Australian economy. The midyear update will carry the revised Treasury numbers, making it the focal point for how the government frames the deterioration in conditions.

For investors, the signal matters because it sets the official baseline for growth and employment against which policy and market expectations will be judged. A weaker growth path combined with higher unemployment changes the backdrop for earnings, hiring and household demand. The revised figures will be watched closely for the scale of the downgrade to growth and the size of the expected increase in unemployment.

Chalmers' warning marks a shift in the public framing of the economy, moving from earlier forecasts to an explicit acknowledgment that conditions are worsening. The midyear budget update will carry the revised Treasury numbers, and the market will focus on how far the official outlook has been cut and how quickly unemployment is expected to rise.