Treasury Downgrades Growth Forecasts Ahead of Budget

‘Events in the Middle East are casting a shadow over the global economy, compounding the concerns about lingering inflation and weaker growth.’
Treasury Downgrades Growth Forecasts Ahead of Budget
Federal Labor Treasurer Jim Chalmers at a press conference at Parliament House in Canberra, Australia on Feb. 15, 2024. (AAP Image/Mick Tsikas)
AAP
By AAP
4/21/2024
Updated:
4/21/2024
0:00

Global financial uncertainty has prompted the Treasury to downgrade its growth forecasts for major economies ahead of the federal budget.

Geopolitical tensions in the Middle East as well as a slowdown in China has led to the rethink on global economies, with Treasurer Jim Chalmers warning of a “fraught and fragile” outlook internationally.

China’s growth has been downgraded by 0.25 percentage points in 2025 to 4.25 per cent, according to Treasury forecasts.

The downgrade would mean China’s growth would be the weakest period since the Asian nation opened its economy up in the 1970s.

The UK’s economy’s forecast has also been downgraded by 0.5 percentage points to 1.25 per cent in 2025, prompted by cost of living pressures and a slump in exports following Brexit.

Japan has had its growth revised to just 0.75 per cent in 2024, down by 0.25 percentage points after weaker than expected consumption.

Ahead of May’s federal budget, Mr. Chalmers has been meeting with G20 counterparts in Washington, and said global uncertainty had led to the revised expectations.

“Events in the Middle East are casting a shadow over the global economy, compounding the concerns about lingering inflation and weaker growth,” he said.

“The fraught and fragile global outlook was a big feature of discussions in Washington DC and will be a big factor as we put the finishing touches on the budget.”

Further revisions on growth forecasts are expected following the release of US GDP figures on April 25, as well as similar data for the EU later in May.

However, the US may buck the trend for lower growth, with the American economy expected to be more resilient in the near term than initial predictions.

The global uncertainty has led to the federal treasurer to warn of the need of economic security at home.

A second consecutive budget surplus is still on the cards in Mr. Chalmers’ third budget.

“Given the global challenges coming at us, the May budget will put a premium on responsibility and a emphasis on security,” the treasurer said.

“Relieving cost of living pressures, repairing our budget and reforming our economy is the best antidote to the kind of risks that we are seeing escalating around the world.”

Australian Associated Press is an Australian news agency.
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