NSW has been stuck in the slow lane.

The state economy expanded by just 0.9 per cent last financial year, the worst result since 1992, not including the disruptions of the COVID-19 pandemic.

Treasurer Daniel Mookhey says the NSW economy is “doing better”.Credit: Marija Ercegovac

Treasurer Daniel Mookhey believes that’s changing.

“The NSW economy is doing better,” he told this masthead. “Things are looking up in global trade. The labour market is pretty tight, but the good news is that private sector investment – especially in renewable energy and data centres – is picking up”.

A state government budget review released on December 19 forecast a solid economic rebound in 2026. But there is one big threat: rising inflation leading to higher interest rates.

The “greatest risk to the NSW economy” the budget review warned, is a persistent upswing in inflation.

These five charts show what’s expected for the NSW economy in the year ahead.

The government expects the NSW economy to grow by 1.5 per cent in 2025-26. If achieved, that would be the fastest expansion for two years.

Growth is then expected to accelerate gently, averaging a solid but not spectacular 2.1 per cent over the four years to 2028-29. That’s slightly better than what was forecast in the state budget last June.

Stronger conditions in the construction sector, underpinned by buoyant house prices, should help boost the state’s growth. New........

© The Sydney Morning Herald