Budget 2018: Economic Overview
The Government is very keen to push its economic credibility in this Budget – to the point that the Budget website is very glossy with a lot of ‘good news’ messages:
- An economy in its 27th year of growth
- Keeping taxes as a share of GDP within the 23.9% cap
- No longer borrowing to fund everyday spending from 2018-19
- Government payments as a share of GDP return to below the 30-year average of 24.8% in 2020-21, the first time since 2012-13.
- Forecast budget surplus in 2021-22
The budget forecasts real GDP at a generous 3% from 2018-19. Total business investment is expected to be 4.5% in the current year (2017-18), before reducing back to 3% next year and then rising again to 4.5%.
CPI is expected to increase marginally from 2% to 2.5% in 2019-20.
Employment is flat. The wage price index is expected to be 2.25% this year before slowly increasing to 4.75% in 2019-20. Unemployment is expected to only reduce marginally to 5.25% from the current 5.5%. The participation rate is also not expected to increase (65.5%).
Many commentators have already pointed out that the budget forecasts the economy to have a quite remarkable growth spurt from its recently achieved gains.
| 2018-19 | 2019-20 | 2020-21 | 2021-22 | |
| Real GDP | 3% | 3% | 3% | 3% |
| Employment | 1.5% | 1.5% | 1.25% | 1.25% |
| Unemployment rate | 5.25% | 5.25% | 5.25% | 5% |
| Consumer price index | 2.25% | 2.5% | 2.5% | 2.5% |
| Wage price index | 2.75% | 3.25% | 3.5% | 3.5% |
| Nominal GDP | 3.75% | 4.75% | 4.5% | 4.5% |
SOURCE: Knowledge Shop
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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.
