Economic and Fiscal Outlook

Economic Outlook

Queensland’s economy is facing significant headwinds in 2026-27, including increased underlying national inflation, rising interest rates, a national fuel crisis, rising commodity prices driven by global conflict, and increasing cost-shifting from the Federal Government, all of which are creating persistent cost pressures.

Against this backdrop, Queensland continues to outperform many other jurisdictions. Gross State Product (GSP) is forecast to grow by 2.5% in 2025-26, following growth of 2.2% in 2024-25 which is the strongest outcome among the States.

While Queensland’s economic fundamentals remain strong, higher inflation, elevated interest rates and the flow-on effects of higher fuel prices are expected to moderate economic activity in 2026-27, with GSP growth forecast to ease to 1.75%.

Growth is then expected to strengthen over the medium term, returning to 2% in 2027-28 as inflationary pressures ease, household consumption recovers and investment activity remains supported by Queensland’s growing population and ongoing demand for housing and infrastructure.

Queensland’s labour market also remains resilient. Employment growth is expected to moderate to 1.5% in 2025-26 following several years of strong employment outcomes.

Inflation remains a key challenge for the economic outlook. Headline inflation is forecast to increase to 4.75% in 2025-26, reflecting the initial impacts of higher global energy and fuel prices and broader cost pressures across the economy. Inflation is expected to ease to 3.75% in 2026-27 as these effects begin to dissipate, before returning towards more moderate levels over the medium term.

While the global outlook remains uncertain, the Crisafulli Government’s efforts to strengthen the economy by attracting investment with its open for business approach, restoring respect for Queenslanders’ money as well as making the difficult decisions for now and the future, allow this Budget to continue strengthening the foundation for a fresh start for Queensland.

Fiscal Outlook

The 2026-27 Budget strengthens the foundation for a fresh start in 2025-26, to continue Budget repair, after a decade of the former Government’s fiscal mismanagement left Queensland with record debt, ongoing deficits and unfunded pressures baked in.

This Budget continues to deliver better services and infrastructure for the future with respect for Queenslanders’ money, making responsible decisions for now and the future.

The Crisafulli Government is delivering a return to fiscal discipline, with lower debt and smaller deficits moving forward compared with the former Government, as reflected in the 2024-25 MYFER. This Budget delivers $500 million in savings achieved through restoring respect for Queenslanders’ money, which sees a return to surplus in 2029-30.

The State’s balance sheet is also improving with Non-Financial Public Sector borrowings forecast to be lower than projected at the 2025-26 MYFER, and across the forward estimates, debt remains lower than the former Government’s final budget position, outlined in the 2024-25 MYFER.