Australia’s economy isn’t stuck because households aren’t spending or businesses aren’t investing, though both are dragging. There’s another culprit that’s been largely overlooked. And economist Stephen Koukoulas thinks it’s time it got proper attention.
“We have an export problem,” Koukoulas says bluntly. “Monthly goods export receipts in nominal terms have fallen from over $50 billion during 2022 to just $42 billion recently. That’s a 15 percent fall in income, and it’s punching a hole straight through our national accounts.”
Koukoulas, who previously advised the Prime Minister and is now Head of Global Strategy at TD, has been analysing the data behind Australia’s sluggish performance. He points out that while policymakers and commentators have rightly focused on weak consumer sentiment, anaemic business investment and the strain of high interest rates, few are zeroing in on what he calls a quiet export recession.
To be clear, it’s not that we’re exporting fewer goods. Volumes, he says, have held up reasonably well. “The tonnages, the container loads of stuff we’re shipping out, are still solid,” he explains. “What’s collapsed is the price we’re getting for it.”
According to the Reserve Bank of Australia’s commodity price index, export prices have dropped by around 25 percent. That fall has hit income hard, month after month. “If we’re down roughly $8 billion per month, that adds up to nearly $100 billion over a year,” Koukoulas says. “That’s serious money evaporating from the economy.”
And because much of Australia’s export income is tied to commodities, it’s not something policymakers can easily fix.
“We’re price takers,” Koukoulas points out. “We can’t ring up China or India and tell them to pay more for our iron ore or coal. Nor can we force them to increase their demand.”
What makes matters worse, he says, is the global outlook. The trade wars haven’t gone away. Tariff tensions between major economies are continuing to bubble under the surface, and with Europe facing its own growth pains, the outlook for global demand doesn’t look rosy. “When I look around the world right now, I don’t see conditions improving for our exporters. If anything, it’s getting harder.”
It’s why he believes domestic policy needs to change tack. If Australia can’t rely on exports to boost the economy, then it must look inward.
“Monetary policy’s still too tight,” he says, pointing to the RBA’s current interest rate settings. “The burden is falling on households and businesses. But given that exports are no longer doing any heavy lifting, the domestic economy is going to have to do more than its fair share.”
That means stronger household spending, more government investment, and perhaps more support for small businesses that are still reeling from pandemic-era debts. But none of that will be easy when mortgage repayments remain high and real wages struggle to keep pace.
Koukoulas also warns of political complacency. “Because export volumes are holding up, there’s this illusion that everything is fine on the trade front,” he says. “But if you’re selling the same amount of goods for far less money, then your income’s down. It’s basic maths. And national income is what funds everything, from public services to household confidence.”
Asked whether this downturn resembles previous export slumps, he shakes his head. “This isn’t like the mining downturn a decade ago when we had a surge in investment followed by a fall in prices. What’s different this time is that we didn’t have a big surge. And now prices have just quietly fallen off a cliff.”
It’s this quietness that troubles him most. “It’s a sleeper issue,” he says. “I don’t think the RBA has addressed it properly. Treasury hasn’t either. But it’s dragging the economy down.”
Koukoulas is now calling for a broader rethink of policy priorities. He’s not expecting miracles. Australia can’t control global prices. But he believes the government and the central bank must stop pretending the weakness is solely about consumers being cautious.
“This is about national income. If exports are bringing in less money, that affects everyone, governments, businesses, families. And if we don’t find other ways to boost growth, we’ll be stuck in this low gear indefinitely.”
His message, ultimately, is simple. We’re poorer than we were, and pretending otherwise won’t help. “If we want the economy to get traction again, we’ve got to stop ignoring the hole that exports have left behind.”
As Australia heads into the second half of 2025, Koukoulas will be watching the data and the policymakers closely. “I’ll be paying more attention to export earnings than I ever have before,” he says. “Because right now, they’re telling us something the headline GDP numbers are too polite to say.”
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