Business Investment Slows Amid Global Trade War Uncertainty

Australia’s economic outlook is facing pressure as business investment weakens, with sluggish mining growth and ongoing global trade tensions weighing on confidence. While company tax revenues are currently benefitting from strong commodity prices, experts warn these gains may not last, adding to fears of slower economic growth.

Business investment is expected to grow by just 1.5% in both 2025-26 and 2026-27, down from 6% in 2024-25. Treasury has pointed to global volatility as a key concern, citing rising trade barriers, inflation, and geopolitical uncertainty. Mining investment is also expected to decline as large LNG projects reach completion, leaving new investment focused mainly on maintaining current production levels.

Despite the slowdown in mining, non-mining sectors are expected to drive investment growth in areas such as renewable energy, logistics and data centres. However, concerns remain about the lack of government measures to support small businesses, with advocacy groups voicing disappointment over the absence of policies such as an extended asset write-off scheme.

The broader picture suggests that growing trade tensions could hurt Australia’s export-driven economy. Higher tariffs, increased costs and policy uncertainty may reduce business confidence and investment. The government is also exploring potential challenges to international trade policies that could negatively affect Australian exports in sectors like food, pharmaceuticals and metals.

Source: The Australian, Capital Brief, Deloitte, Morgan Stanley, RBA