Australia cut its growth and budget surplus forecasts as worsening global conditions hurt revenues in the mining-driven economy, and Treasurer Wayne Swan said real gross domestic product (GDP) was forecast to grow at around 3.0 per cent in the 2012-13 and 2013-14 financial years -- a downgrade of 0.25 of a percentage point for fiscal 2012-13 since budget figures were released in May.
Swan said Australia, which avoided recession during the global financial crisis, remained on track to return to a modest surplus ahead of all the other major advanced economies.
Decisions taken to balance the books were “difficult but critical at a time of falling revenues and ongoing global headwinds”, Swan said in his Mid-Year Economic and Fiscal Outlook.
“Global volatility and substantial revenue writedowns have made returning the budget to surplus in 2012-13 much harder but the government remains on track to deliver a surplus,” he said.
“Global growth has slowed in recent months, with the recession in the euro area and the subdued recovery in the United States weighing on growth in our region,” Swan said.
“The weaker global outlook and lower-than-expected commodity prices, along with the general easing of price pressures in the economy, are again slowing the recovery in tax revenue.”
Australia has lost A$160 billion in tax revenues since the start of the global financial crisis, and Swan said a further writedown in tax receipts of close to A$22 billion over the next four years would occur.
This will include a A$4 billion writedown for the financial year ending June 30, 2013, he said, with the budget surplus now forecast to be A$1.1 billion, down from the A$1.5 billion estimated in the May budget.
Unemployment was forecast to remain at 5.5 per cent over the next two years.