ECONOMIC SCENARIOS/ASSUMPTIONS
SCENARIO 2 C&W Baseline
SCENARIO 1 Productivity-Led Expansion
SCENARIO 3 AI Bust - Slowcession
SCENARIO 4 Dystopic/Displacement
50% Probability
15% Probability
25% Probability
5% Probability
• Gradual AI adoption lifts productivity growth through the next decade; GDP growth runs between 2% to 2.5%. • Labor: Strong growth trajectory is maintained before gradually slowing over forecast horizon. • Inflation falls back within the RBA’s 2% to 3% target band by 2028; gradually improving productivity contains inflation over the forecast horizon and allows the RBA to bring the Cash Rate back to neutral. • Terms of trade normalise gradually; iron ore drifts higher on steady global steel demand.
• Faster AI adoption broadly augments labour and raises productivity growth. • Real GDP growth outperforms baseline by 1 to 2 percentage points for the next 10 years. • Robust job market adds an average of 250,000 jobs annually over the next decade. • Inflation modestly lower than baseline as productivity lowers unit labour costs, allowing the RBA to remain broadly accommodative. • AI-driven global demand lifts steel-intensive construction and critical minerals; the price of iron ore holds above baseline.
• AI fails to meet elevated expectations, triggering a stock market correction and tightens global access to credit. • The correction hits in late 2026, with the bulk of the downside landing in 2027 as construction and business investment freeze and Australian growth contracts sharply. • Central banks respond with more near-term easing. • The economy stabilises in 2028 and returns to growth as monetary policy gains traction. • AI adoption continues, but at a gradual pace. • After the cyclical downturn, the patterns in the economy begin to resemble the contours laid out in our baseline scenario.
• AI adoption advances rapidly but proves more labor- substituting than augmenting. • Policyfail to implement regulatory makers guardrails as AI begins to replace human jobs. • Net employment growth sluggish; unemployment rate rises above 7%. • As labor displacement deepens and demand weakens inflation runs below the RBA’s target, pushing the Cash Rate below baseline. • Gains accrue to capital over labour; resources output holds up on autonomous extraction even as wages and consumption fall.
Source: Cushman & Wakefield Research, *scenarios will not sum to 100% to allow for other possible scenarios
Cushman & Wakefield
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