Australia’s economic outlook faces downgrades in the Albanese Government’s first budget next week, with Treasurer Jim Chalmers cautioning the global economy is treading an “increasingly perilous path”.
Fresh from meetings in Washington DC with the International Monetary Fund and G20 finance ministers, Mr Chalmers echoed warnings from leading economists that the risk many of our key trading partners could face recessions was growing.
“Downside risks loom large — this was a clear message from meetings,” he added.
“The budget will confirm the stark deterioration in the outlook for global growth and in several major economies with some at risk of falling into recession.”
Figures released by the government, which are not expected to change before budget night, show the extent of Treasury’s downgrades.
Economic growth in the US in 2023 is now forecast to be 1.5 per cent lower than expected in March and in Europe it is expected to be 1.75 per cent lower.
Predictions for China and have India have also fallen, contributing to the global outlook dropping by a full per cent to 2.75.
Forecast growth in the United Kingdom has been hit hard, revised down from 2 per cent to minus 0.25 per cent.
“Here in Australia, we have some things going for us, including plenty of people in work and decent demand for our exports,” Mr Chalmers said.
“But we will not be spared from the consequences of a global slowdown.”
“A weaker global economy with higher inflation and heightened risks makes it even more important we deliver a responsible budget here at home.”
NSW claims it has been short-changed
Countries around the world have been grappling with repeated shocks, like fuel and energy price increases triggered by the Russian invasion of Ukraine and pandemic related restrictions in China.
Since taking office, Mr Chalmers has repeatedly referred to the global gloom in an attempt to start a discussion about the state of Australia’s budget, something Treasurer’s often do to prepare the population for difficult decisions or contentious reforms.
The government is expected to spend some of this week dripping out spending announcements, ahead of budget night next Tuesday.
On Sunday, it confirmed how its $9.6-billion in infrastructure spending would be allocated between states and territories.
The New South Wales Liberal government claims it has not got its fair share, accusing the Commonwealth of favouring Labor-led states.
NSW has been allocated $1-billion in funding, while Victoria is on track to receive roughly two and a half times as much.
Due to allegations of rorting, shortages of workers and problems with the supply of materials, some infrastructure programs set up by the former Morrison government are expected to be cut or delayed in the budget.
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