Australia’s economic growth is expected to slow sharply next financial year as rising inflation curbs household consumption, according to new forecasts to be unveiled by Treasurer Jim Chalmers in tomorrow’s budget.
Budget papers are set to show gross domestic product (GDP) for fiscal 2023-2024 will be downgraded to 1.5 per cent from the 2.5 per cent forecast in April. GDP is also due to be downgraded to 3.25 per cent from 3.5 per cent for 2022-2023, according to draft figures from the Treasury.
Officials are also warning that a slowing global economy, in particular the sputtering Chinese property sector, will hit growth in Australia which is enjoying its lowest unemployment rate since the 1970s.
“These headwinds will inevitably impact our growth outlook, and Australians are already feeling the pinch from higher prices and rising interest rates.”
Record commodity prices and a booming labour market are expected to provide budget relief and analysts expect the deficit to shrink to between A$25 billion (RM75 billion) and A$45 billion, lower than initially feared.
But Chalmers has repeatedly warned Australians to expect a “responsible budget” and said the government can only provide limited cost-of-living support for fear of adding stimulus that works at cross purposes to the Reserve Bank of Australia’s rate hikes.
“The best defence against these economic headwinds is a responsible budget … along with responsible cost-of-living relief that won’t make the job of the Reserve Bank more difficult,” Chalmers told the Australian Financial Review. — REUTERS
