The Stats Guy returns to his demographic crystal ball for Part 2 of his 2025 forecasts
Yesterday, I gave you some alarming forecasts for the coming year, today there’s a little more good news thrown into the mix.
For part two of my 20 predictions for 2025 – and my last column of the year – join me again as we gaze into the demographer’s crystal ball.
1. More cars sold in 2025 than in 2024. In a recent column, I explained why Australia is experiencing the decade of the car.
Millennials moving in the multiple cars per household stage of the lifecycle, population growth, and continued urban sprawl are demographic factors pushing more cars onto Australian roads.
On top of this, we will likely see slightly more disposable income in the pockets of Australian households in 2025 – some of this income will find its way to the local car dealership.
2. One more car-related forecast. Electric vehicles will make up a higher share of vehicle sales than in 2024 when just over 6 per cent of new vehicles were electric.
Households will buy EVs at a slightly higher rate in 2025. More importantly, fleet managers will double down on electric vehicles in the coming year.
Countless organisations have zero emission targets to reach by the mid-2030s – that’s only one or two lease cycles away. The transition to a green fleet must begin now to reach targets comfortably.
3. Tourism numbers will reach pre-pandemic levels and complete the recovery of the industry.
Last year already saw the recovery of tourism spending in Australia, but that shouldn’t be celebrated too enthusiastically as figures weren’t adjusted for inflation.
In 2025 we’ll see tourists return to Australia. This is welcome news but seriously challenges our local tourism industry to find enough workers to service this additional demand.
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Staffing will be a major headache for anyone in the tourism sector in 2025 and beyond.
4. I agree with the majority of economists who forecast that inflation will ease in 2025.
This ease in inflation will most likely lead to an interest rate cut or two next year.
But don’t expect a low-interest rate environment in the coming decade. Don’t try to be too cute about timing your investments.
5. This leads us nicely to my next forecast: High consumption will make Australian retailers (and shopping centres) very happy.
As shown in a chart in a previous column, Australia faces a decade of high consumption as Millennials enter the highest spending phase of the lifecycle and Baby Boomers happily spend money in their retirement.
The coming decade therefore sees the biggest and the richest generation spending tons of money. That’s inflationary.
On average, borrowing money will be more expensive in the coming decade than in the last. Businesses must invest in equipment and technology now rather than trying to be too cute about it and hoping to time interest rates to perfection.
6. Expect more geopolitical disruptions. What exactly? No idea.
We are still operating in a leaderless world. American and Russian influences around the world are decreasing. The resulting power vacuums will be filled by regional powers of sorts.
A Trump presidency might stop some actors from becoming too aggressive, but no underlying issues will be solved in 2025. Rather we can expect more votes for parties on the extremes of the political spectrum in Europe during a time that will see a huge expansion of European military spending.
Across Africa and the Middle East, new conflicts might well break out. Doing business internationally is going to be relatively annoying.
No need to be too pessimistic for us in Australia though. The four simple things that we offer the world (mining, agriculture, tourism, international education) will still be in high demand.
To say it the Australian way: ‘She’ll be right, mate’ – our simplistic national business model will continue to deliver wealth in 2025.
7. A great year for indoor play centres is ahead. We will see more play centres opened across the country – especially on the urban fringe where young families buy their first homes.
In the past, kids visited each other’s homes, played without adult supervision at the local playground and roamed the streets on their bikes.
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Today families move into houses on smaller lots with comically small backyards – hardly the right place to roam and play wildly.
In many households, at least one parent works from home and kids’ noise is an unwelcome distraction.
Even though Australia has gotten safer since today’s parents were kids, we are more reluctant to let our children travel around town independently. Especially in car-dependent communities on the urban fringe.
This development is pertinent. This is where indoor play centres of all types fill a gap. A group of kids can engage in wild unsupervised play while the parents work in the integrated centre café or waste time on their phones.
I expect a great year – in fact, a great decade – for indoor play centres.
8. The gender pay gap continues to narrow. I argued in a previous column, that the gender pay gap is mostly a primary carer gap at this stage.
The gender pay gap has largely disappeared for non-parents under 50, transforming into a “primary carer pay gap” driven by caregiving responsibilities, which primarily fall on women.
While this seems like a simple rebranding, broader trends challenge traditional dynamics. Women significantly outperform men in education – a key predictor of income – resulting in more households where women are the higher earners.
Pragmatic households will increasingly have women returning to work more fully after caregiving periods, while men scale back. This shift, combined with generational change, is accelerating gender equality.
Gen X leaders, known for their commitment to fairness, are managing workplaces dominated by millennials and Gen Zs, who demand equal treatment.
These cultural and economic factors are reshaping workforce participation, pointing to a future where the gender pay gap continues to shrink, driven not just by societal norms but also by practical household decisions. I am most certain that gender equality will continue to improve in 2025.
9. More mental health cases will be reported in 2025. In a past column on mental health, I argued that cases in Australia are likely underreported in older generations.
Young people, on paper, report much worse mental health outcomes than older people. Is this a life-stage thing? Young people are unhappy old people are happy? It’s not that easy.
Most likely older people and men underreport poor mental health. Thankfully this is changing because of the younger generations’ increased acceptance of mental health as a health condition. I am predicting higher reported mental health cases this year than in 2025.
10. The War on Vapes starts to kick off. I previously applauded the fantastic public health campaign that Australia ran against smoking.
The same piece also lamented the dangerous and under-regulated new trend of vaping. Misleading health claims are just the beginning. Unlike smoking, which primarily harms the lungs, vaping introduces chemicals with potential neurological effects, posing unknown risks.
Australian research reveals that no legally available vapes had accurate ingredient labelling, raising grave concerns about consumer safety. Environmentally, disposable battery-powered vapes are a catastrophe.
As smoking numbers among young Australians declined, the smoking industry came up with battery-powered “fruit-flavoured cigarettes” and marketed heavily to young consumers.
Regulation will catch up with vaping in 2025. I suspect serious anti-vaping efforts in the coming year.
While individuals should retain the right to vape, the dangers (neurological damage, mislabelled ingredients, and environmental costs) must be managed much better. The “Wild West” era of vaping innovation is going to be heavily regulated soon.
See you in 2025.
Demographer Simon Kuestenmacher is a co-founder of The Demographics Group. His columns, media commentary and public speaking focus on current socio-demographic trends and how these impact Australia. His podcast, Demographics Decoded, explores the world through the demographic lens. Follow Simon on Twitter (X), Facebook, LinkedIn for daily data insights in short format.
