Headlines via Reuters:
- Australia sees 2024/25 budget deficit at A$26.9 bln vs A$28.3 bln projected in May
- Australia sees 2025/26 budget deficit at A$46.9 bln, 2026/27 A$38.4 bln
- Australia sees GDP growth at 1.75% in 2024/25, 2.25% in 2025/26
- Australia sees unemployment rate at 4.5% in 2024/25, through to 2026/27
- Australia government sees net debt at A$1.16 trillion in 2027/28, or 36.7% of GDP
More from the report, in brief:
Budget Deficit Outlook:
- 2024/25 deficit revised to A$26.9 billion, improved from A$28.3 billion projected in May.
- Deficits expected to worsen: A$46.9 billion in 2025/26 and A$38.4 billion in 2026/27.
- Total deficits over three years to 2027/28 now projected at A$117 billion (A$23 billion worse than May).
GDP and Economic Growth:
- GDP growth forecast cut to 1.75% for 2024/25 (from 2.0% in May).
- Growth to recover to 2.25% in 2025/26.
Unemployment Rate:
- Expected to stay steady at 4.5% from 2024/25 through 2026/27.
Net Debt:
- Projected to rise to A$1.16 trillion by 2027/28, or 36.7% of GDP.
- Up from an expected A$940 billion this year.
Key Drivers of Deficits:
- Increased spending on health, cost-of-living relief, and veterans' care.
- Automatic spending increases in pensions, Medicare, and medicines.
Economic Challenges:
- Public spending has prevented recession amid weak private sector growth.
- Commodity export revenues downgraded due to sluggish demand in China, affecting iron ore prices.
Labor Market and Wages:
- Wage growth downgraded to 3.0%, countering government claims of stronger pay growth.
RBA Policy:
- Economic slowdown prompted the Reserve Bank of Australia to signal possible rate cuts, holding rates steady at 4.35% this year.
Australian Treasurer Chalmers.
The indications from today's release show its estimated that the budget will not return to surplus for at least a decade.
This article was written by Eamonn Sheridan at
www.forexlive.com.
