Jim Chalmers is putting a positive spin on the economy, but is the outlook for Australia grim?

The economy slowed sharply in early 2026 and Australians’ living standards are once again going backwards. At the risk of upsetting the treasurer by “talking down the economy”, as he put it, there wasn’t all that much to love in the latest national accounts. And a lot of the bad news was papered over by the extraordinary rush to build datacentres . The economy was indeed running hot in the second half of 2025, which helps explain the pickup in inflationary pressures even before the US and Israel started bombing Iran in late February. That recent strength accentuates the slowdown in the latest figures. After expanding by 0.9% in the December quarter, real GDP growth faltered to just 0.3% in the three months to March. Speaking to the press after the release of the official figures, Jim Chalmers remained laser focused on the annual growth in real GDP, which was steady at 2.5% in the year to March. “This growth is really solid in the circumstances,” the treasurer said. “You think about everything that’s coming at the Australian economy . The fact that we’ve got any growth at all, given the challenging global circumstances, I think is welcome.” He lauded the extraordinary boom in building datacentres to cater for the looming artificial intelligence revolution. We haven’t seen this pace of new business spending since the end of the mining investment boom nearly 15 years ago. …