Australia Economic Outlook: What lies ahead for global trade, currency, and confidence in 2026?

After a turbulent 2025, Australian businesses are entering 2026 with cautious optimism. At home, easing interest rates and targeted federal support are helping to rebalance conditions. But globally, trade dynamics are still more uncertain than they’ve been in years.

“Global activity this year has generally been more resilient than expected,” the RBA noted, adding that “the likelihood of a severe global ‘trade war’ has diminished.” Yet the central bank remains wary, warning that “uncertainty in the global economy remains elevated.”

We explore the Australian economic outlook for 2026, from the continuing impact of the US’s “reciprocal” tariffs to the forecast for the dollar in the year ahead.

While the US “Liberation Day” tariffs have disrupted Australian importers and exporters – including the removal of the de minimis exemption e-commerce exporters rely on – economic forecasts remain surprisingly stable in the short term.

“Global economic prospects have generally improved,” notes Commbank. The RBA adds that the impact of recent US tariffs has been modest so far, with global growth expectations even being revised upward.

But a cautious attitude is warranted. “Uncertainty in the global economy remains elevated,” warns the RBA, noting that current trade policy developments “are still expected to have an adverse effect on world growth over time.”

Peter Dragicevich, Currency Strategist (APAC) at Corpay, agrees. The tariff situation is starting to bite down – and I think it'll bite down even harder in some areas as we get through 2026,” he says. While the legality of the way the tariffs were implemented is currently under investigation by the US Supreme Court, Peter says “tariffs appear here to stay, and that economic impact should continue to grow.”

Beyond the US’s tariffs, the broader trade landscape is being shaped by a complex mix of geopolitical tensions, shifting monetary policy, and the risks of the “AI bubble” bursting. While headline volatility has eased, the calm may be misleading.

Markets may be underpricing geopolitical and economic risk – particularly in the US, where structural headwinds are building, and investors are warning of the risks of the current AI bubble. According to the latest Bank of America (BofA) Global Fund Manager Survey (FMS), investors have warned companies are “overinvesting” for the first time in two decades, with 45% of investors saying the “AI bubble” being identified as the number one biggest “tail risk” for the economy and markets.

China – Australia’s largest trading partner – is a critical variable. Despite softening exports to the US, China’s overall trade performance has remained resilient, with stronger exports to other regions and an aggressive domestic stimulus effort driving infrastructure and bond-funded investment. These efforts, combined with stronger leading indicators, suggest China’s growth momentum could strengthen into 2026, says Peter – offering modest support to global sentiment and Australian export demand.

Few parts of the economy reflect global uncertainty as directly as the currency market – and the Australian dollar is no exception.

According to CommBank’s FX Strategy Report, the Australian dollar is expected to peak against the USD in March 2026, before retreating again by year’s end. The US dollar, meanwhile, is likely to rebound as US economic performance outpaces other major markets.

“The AUD is benefiting from a weaker USD and strong investor sentiment. We expect the recovery to fade as the US economy regains momentum and Chinese growth remains subdued,” says Joseph Capurso, Head of FX, International & Geoeconomics at CommBank.

China’s structural headwinds – from property and banking to demographics – are also weighing on commodity demand. And for Australia, that directly affects export value and currency strength.

Australian businesses are heading into 2026 with more questions than answers. From unpredictable tariffs to shifting global alliances and a volatile dollar, the traditional rules of trade are being rewritten in real time. While resilient global activity has helped steady sentiment for now, elevated uncertainty and geopolitical flashpoints mean conditions could shift quickly.

In this environment, staying informed and prepared is essential. Businesses that monitor global developments closely will be better placed to manage exposure and maintain control – and find opportunity amid ongoing disruption.

In this environment, Trade Finance isn’t just a safeguard – it’s a smart strategy. It empowers businesses to reduce uncertainty, unlock working capital, and move forward with confidence.  

Whether it’s Trade Finance, cross-border payments in collaboration with Corpay, or our market-leading supply chain technology, Octet gives Australian businesses the tools and support to trade smarter – whatever the economic outlook.

Talk to us today about how we can help your business.