This year’s joint board session for IAB Austraia, the Media Federation of Australia (MFA) and Australian National Association of Advertisers (AANA) Economic State of the Nation was led by Economist Stephen Koukoulas, and The Australian Financial Review’s Economics Editor, John Kehoe with contributions from the business leaders from the three boards. Below is a high level summary of the discussion that was held on the evening of 17th February 2026.
The economy is not broken, and by several measures it is holding up well, but it also does not yet feel buoyant. Headline indicators remain solid, unemployment is low, yet household confidence is fragile and the policy decisions over the next few months carry weight. The thread running through the discussion was that 2026 is shaping up as a year of steady progress rather than sharp swings. The focus now is whether leaders can lift growth, living standards and business confidence without reigniting inflation.
1) Steady growth, cautious confidence
The broad view was moderate growth rather than boom or bust, with 2% to 2.25% seen as a realistic range for 2026 and into 2027. That is not spectacular, but it is stable. For our sector, that usually translates to disciplined investment and a higher bar for proof, rather than wholesale pullback.
2) Inflation still in play
There was a genuine difference in tone on inflation. One perspective was that the recent spike may reflect temporary, policy-linked factors such as subsidies unwinding. Another view was that central banks rarely move interest rates only once, so businesses should prepare for the possibility of further increases if inflation remains firm. The shared point was that the RBA is data dependent and prepared to adjust course as the numbers evolve.
3) Consumers recalibrating, not retreating
Household spending was described as uneven, with promotion-driven spikes followed by softer periods. Consumer sentiment remains important. When confidence dips, people tend to trade down or delay purchases rather than stop spending entirely. More items in the basket, lower average price per item. For marketers, this is a year to demonstrate value clearly and consistently.
4) The May Budget as a signal
The May Federal Budget was framed as a test of whether government leans into structural reform or continues with incremental measures. Budget repair, intergenerational equity and possible revenue changes were part of the discussion, particularly in areas linked to housing and investment. Many practical constraints sit at state level, especially planning and approvals, but federal leadership will still set the tone.
5) Productivity linked to living standards
Productivity was treated as the only sustainable path to higher living standards without adding price pressure. Suggestions included simpler tax settings, reducing housing-related barriers that limit mobility, harmonising licensing rules across states, and stronger business investment in technology and processes. The real opportunity sits in connecting these changes to wages, jobs and resilience.
6) Housing and migration balance
Housing supply is improving but remains below what is required to close the gap between demand and delivery. Migration supports skills and growth, but levels need to align with housing and infrastructure capacity.
7) AI as a practical lever
AI was described as both opportunity and risk. It could lift productivity and support growth over time, though impacts may vary across sectors before new roles emerge. The clear takeaway was that organisations should build capability and practical use cases now.
8) Energy and investment pressures
Energy remains central to both cost and reliability debates. The transition is expensive regardless of pathway. At the same time, Australia is undertaking several large capital programs across housing, infrastructure and energy, competing for labour and materials in a tight labour market.
Implications for marketing investment in 2026
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Expect continued focus on measurable outcomes and effectiveness.
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Clear utility and credible value will resonate strongly.
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Confidence will move with key data releases and Budget signals.
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Treat AI as core operating capability.
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Plan for both premium and value-led demand segments.
The overall mood was cautious, but there was a sense that the foundations are sound. For organisations that stay disciplined, invest intelligently and communicate with clarity, 2026 offers steady ground rather than quicksand.