Treasury revises the economic outlook

·2-min read

KEY POINTS OF JIM CHALMERS' STATEMENT ON THE ECONOMIC OUTLOOK TO PARLIAMENT:

CONSUMER PRICE INDEX

* 2022: 7.75pct in Q4 vs 6.1pct in Q2 (current)

* 2023: 5.5pct by Q2, 3.5pct by Q4

* 2024: 2.75pct by Q2

GROSS DOMESTIC PRODUCT (real)

* 2021/22: 3.75pct, down from 4.25pct in PEFO*

* 2022/23: 3pct, down from 3.5pct

* 2023/24: 2pct, down from 2.5pct

UNEMPLOYMENT RATE

* Currently at 3.5pct and forecast to remain "low" for rest of this year

* 3.75pct by June 2023, in line with PEFO*

* 4pct by June 2024, up from 3.75pct in PEFO*

EMPLOYMENT

* 1.5 pct in 2022/23, in line with PEFO*

* 1.25pct in 2023/24, down from 1.5pct in PEFO*

WAGE PRICE INDEX

* Nominal wages to grow by 3.75pct in 2022/23 and 2023/24 vs PEFO* forecasts of 3.25pct

* Real wages (excluding inflation) won't start growing again until 2023/24

BUDGET

* Short, medium and longer-term pressures on the budget are now "more pronounced"

* Additional COVID-related expenditure so far will cost the budget an extra $1.6 billion this year

* A temporary improvement in tax receipts may not persist over time

* Government payments will be around $30 billion higher over the forward estimates than was forecast pre-election

* Some blowouts likely, including the former government's Modernising Business Registers project, which could be $1 billion over budget

* The cost of interest on government debt will grow as more debt is refinanced at higher yields

* Interest payments on government debt will be the fastest growing area of government spending

* A full set of fiscal forecasts will be published in Labor's October budget

* Pre-Election Economic and Fiscal Outlook, published in April ahead of the May 21 federal poll

Source: Treasury, speech by Treasurer Jim Chalmers

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