Treasury and Finance say economy is resilient | Liverpool City Champion

The Treasury and Finance Departments believe Australia’s economy remains strong despite significant global headwinds, including widespread inflation and the war in Ukraine.

On Wednesday, Department Secretaries Steven Kennedy and Rosemary Huxtable signed the Pre-Election Economic and Fiscal Outlook, as part of the Budget Honesty Charter presented by former Liberal Treasurer Peter Costello.

Their independent assessment of the federal government’s financial books turned out to be little different from the budget presented by Treasurer Josh Frydenberg last month.

“The economic and fiscal outlook has not changed materially since the release of the 2022/23 budget,” PEFO says.

“While there have been recent moves in some economic indicators, considering all available information, our judgment is that these have not materially altered the economic and fiscal outlook.”

PEFO’s forecast for the deficit for fiscal year 2021/22 was $79.8 billion, as in the budget, but for 2022/23 it is now slightly lower at $77.9 billion from $78 billion. dollars in the budget.

Further ahead, the deficit for 2025/26 is now $42.9 billion from $43.1 billion, while other deficit projections remained unchanged.

The report estimates that policy decisions made since the budget amount to $1.3 billion, although this has been partly offset by the reversal of a number of decisions made previously but not yet announced.

The Contingency Reserve has been reduced from budget by $338.4 million over the four years to 2025/25, which includes a partial reduction in the provision for potential long-term flood response costs from February to March in parts of New South Wales and Queensland. .

The economic forecasts for growth, unemployment, inflation and wages in the PEFO were the same as in the budget.

These include the 2022/23 forecast of economic growth of 3.5% in 2022/23, an unemployment rate of 3.75%, inflation of 3% and growth in wages of 3.25%.

“As an energy and food exporter with very limited direct trade exposure to Russia and Ukraine, Australia is relatively well placed to weather the effects of the US invasion of Ukraine. Russia,” PEFO said.

It says recent record high prices for major export commodities will boost Australia’s incomes in the near term, although high world oil prices are reflected in rising petrol prices and other consumer prices. consumption.

“As markets expect interest rates to normalize in coming years, household and corporate cash savings significantly higher than at the start of the pandemic should support domestic demand to remain resilient,” the report said.

Australian Associated Press

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