Happy New Year 🎉
Back at it for 2026 and hope everyone is looking forward to a big year.
A few predictions is always a fun way to kick of a new year, so looking at the first half of 2026.
- Inflation stays stubbornly above 3%
While we have had a couple of relatively benign prints over the last few months, price pressure remains significant, and government subsidies are due to roll off.
- RBA won’t increase rates
While I expect inflation to remain outside the target range, I think the RBA will talk tough but do nothing. Growth is still soft and they have a clear bias toward supporting the labour market.
- Unemployment remains below 4.5%
Hiring demand has cooled but not collapsed which should be enough to maintain employment, especially with the RBA sitting on its hands.
- Growth and Productivity remains weak
We haven’t seen any significant reforms coming out of the productivity round table and nothing appears to be on the cards for 2026. Without substantial reforms to boost productivity (and thus growth) the economy will stay in the doldrums.
- Insolvency appointment number will be similar to last year
The pipeline remains steady as businesses work through higher input costs, ATO/creditor pressure and refinancing hurdles. However, the bias will shift from SBRs back to CVLs and VAs.
Finally, three quick thoughts for businesses rolling into 2026:
- Protecting cashflow and proactive budgeting will be more important this year as the impact of payday super will result in a significant cashflow impost in the middle of the year.
- With growth remaining slow, it's time to double down on practical productivity. Simplifying operations, tightening up processes, and investing where payback is clear.
- You can no longer ignore AI. At this point, while some of the hype may be overdone, it does have clear use cases where it can improve efficiency.