(Originally published at Crikey.com.au)
Crikey intern Nikki Bricknell writes:
Looking at our domestic economy, it looks like the real GDP will go down just a smidgen, unemployment will stay exactly the same, and the consumer price index will go up.
Thanks to the huge demand for iron ore (which will drive nominal GDP up 9.25% this year), commodity prices are expected to increase taxation receipts by $310 million this year and $7.8 billion over the next four years.
But weaker economic growth means the benefits to the Budget bottom line are relatively limited. This year the deficit forecast has been revised downward from $40.7 billion up to $40.3 billion. In 2011/12, the deficit is expected to be around $10 billion, lower by $3 billion. There’ll also be a more substantial return to to surplus in 2012/13, up from $1 billion to $3 billion. However, the projections for 2013/14 have dropped by $600 million.
Economic growth has been revised downwards slightly in 2010-11, to 3.25%, and there’s a similar 0.25% downward revision for 2011-12 to 3.75%. Unemployment is expected to remain at 5% this year and 4.75% next year. The inflation forecast has been revised upward this year and next from 2.5% to 2.75%. Wage pressures are expected to increase this year and next, but at the same rate as forecast in May – 3.75% this year, 4% next year.
