By Stocksak: Australia’s budget to reduce growth

© Stocksak. FILEPHOTO: A worker pushing his trolley with pedestrians walks past the Reserve Bank of Australia head office in central Sydney (Australia), March 7, 2017. REUTERS/David Gray

SYDNEY (Stocksak), Australia’s Labor government will present its first budget Tuesday as economic growth slows at home and abroad. It will emphasize that its spending will be focused on easing the cost of living without igniting an already high level of inflation.

Treasurer Jim Chalmers said officials were keen to avoid Britain’s recent mini-budget crisis. He stated that officials worked to ensure fiscal policy and monetary policy are in line in the budget to help the Reserve Bank of Australia fight against inflation.

Chalmers reiterated Monday’s statement to ABC Radio Brisbane that fiscal prudence will support its spending plans.

He stated that there will be cost-of living relief in the budget. However, it will be responsible and restrained. The best way to provide cost-of life relief is to do so in a way that has other benefits for the economy.

“And that’s how you do it without making this inflation problem that we’ve got in the economy even worse by pushing up prices even further.”

Chalmers recently warned that a slowing of the global economy, particularly the sputtering Chinese real estate sector, would impact growth in Australia, which is currently experiencing its lowest unemployment rate since 1970s.

Domestically, the slowing of growth is also due the global phenomenon that skyrocketing inflation rates have had a negative impact on household spending.

Budget papers will show that gross domestic product (GDP), growth for the fiscal year ending June 30, 20,24 will be lowered to 1.5% from 2.5% in April. According to draft figures released by the Treasury Monday, GDP growth will be lowered to 3.25% from 3.5% in 2022-2023.

Chalmers stated in an interview with ABC Radio that the budget will include substantial measures regarding childcare, paid parental leaves, and wage growth.

Due to high prices of many major commodities exported by Australia and a strong labour market, the budget deficit will be smaller than initially thought.

Analysts believe that the 2022/23 deficit would be A$25-45 billion. That’s approximately 1-1.5% gross domestic product. It is also relatively low by international standards.

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