Budget 2017: Economic Overview

The Government’s economic forecasts are optimistic (and susceptible to change) with global growth expected to recover and Australia’s economy to expand. However, the economic commentary in the Budget is littered with comments such as “uncertainties remain.”

• Growth is expected to rebound to 2¾% after slowing in 2016-17 as a result of weather-related factors in early 2016-17 and more recently Tropical Cyclone Debbie.
• A deficit of $29.4 billion in 2017-18 returning to a projected surplus of $7.4 billion in 2020-21.
• Growth in payments restricted to less than 2% per year.
• The drag on growth from mining investment is expected to diminish.
• Non-mining business investment is forecast to grow by 4½% in both 2017-18 and 2018-19.
• Wages growth is expected to improve (2% before increasing to 2.5%) as domestic demand strengthens but the outlook for wage growth remains subdued in the near term, reflecting spare capacity in the labour market.
• Australia’s major commodity exports rose sharply over the past six months and are providing a temporary boost to national income but this is not expected to sustain.
• Total exports forecast to increase by 5% in 2017-18 and 4% in 2018-19.
• Services exports forecast to grow by 4½% in 2017-18 and 4% in 2018-19.
• Rural exports are expected to grow by 6% in 2016-17. A return to average seasonal conditions is expected to underpin a fall in rural exports in 2017-18.
• Household consumption forecast to grow by 2¾% in 2017-18 and 3% in 2018-19.
• Employment growth is expected to be 1½% through the year to the June quarters of 2018 and 2019. The unemployment rate is forecast to decline modestly.
• Dwelling investment is expected to grow by only 1½% in 2017-18 and to fall by 4% in 2018-19 once the current elevated pipeline of building work comes to completion.
• Consumer prices are expected to grow by 2% through the year to the June quarters of 2017 and 2018 and by 2¼% through the year to the June quarter 2019.

SOURCE: Knowledge Shop

To discuss how this may impact your circumstances please contact PPT on (03) 5331 3711.

DISCLAIMER: The material and contents provided in this publication are informative in nature only.  It is not intended to be advice and you should not act specifically on the basis of this information alone.  If expert assistance is required, professional advice should be obtained.