Activity is expected to accelerate slightly in 2017. The transition of the economic model will give an impetus to growth by reducing the impact of the Chinese slowdown and the worsening trade terms which affected it in 2016: following the mining boom, the country has been working to diversify its economy in order to offset the fall in mining income. The services sectors (notably tourism and education), as well as the sectors strong in research and development will experience strong investment growth. Residential investment is also likely to continue, thus stimulating the construction sector. Meanwhile, slower demand from China for iron ore and coal will be partially offset by more intensive exploitation of other commodities and by expansion of the services sector. Private consumption is expected to continue to sustain activity because of the low unemployment rate and the steady rise in property prices. The central bank's accommodative monetary policy (key rate of 1.5%) will also support private consumption despite and already considerable level of household debt (185% of gross disposable income). Slightly above the central bank target (2%), inflation is expected to rise gradually insofar as certain factors allowing inflationary tensions to be contained are starting to weaken, in particular slower wage rises, the modest oil price recovery and more intense competition on the distribution market in the past. The risk of a stronger than expected economic downturn in China (Australia's leading trading partner accounting for one third of exports) could hit activity. Nevertheless, the country has room for maneuver on fiscal and monetary policy.

The fiscal consolidation sought by the former prime minister is no longer a priority. Indeed, Prime Minister Turnbull wants to adopt a pro-business policy by lowering taxes and allocating AUD 1.1 billion (0.1% of GDP) to innovation and entrepreneurship. Meanwhile, security issues featured strongly in the debates during the last general elections. The government is, accordingly, planning to invest USD 30 billion in defense over the next 10 years. So, the public deficit is expected to continue to rise, while remaining at a relatively low level compared with other OECD countries. The current account deficit is expected to narrow slightly, taking into account higher exports of copper and liquefied natural gas, which benefited from the previous depreciation of the Australian dollar. Exports of services also contributed to an improvement in the current account deficit, thus offsetting the rise in imports triggered by private consumption. Australia is still heavily dependent on Chinese demand (notably for iron and coal, the two leading exports) despite starting to adapt its economic model, a change which could, however, benefit from Asian demand to diversify its exports.

Following a no-confidence motion passed against former Prime Minister Tony Abbott, current Prime Minister Turnbull called for early elections in July 2016 in order to obtain a bigger majority. Despite being re-elected, this gamble failed, with the (Liberal – National) coalition losing 15 seats compared with the previous parliamentary term (76 seats won of the 150-seat House of Representatives). The political instability which has prevailed since 2010 (five prime ministers in six years) is thus set to continue. New elections before the end of his mandate (2019) cannot be ruled out if Turnbull wants a larger majority or if the more conservative wing of the party (Abbott's supporters) see it as an opportunity to pass a motion of no confidence against Turnbull. Internationally, Australia's policy is to establish closer economic ties with the Asia-Pacific region (in particular China) while maintaining a special relationship with the United States. However, its membership of the Asian Infrastructure Development Bank (set up by China) could create tensions in its relationship with the United States.