Treasury Lowers Growth Forecasts in Anticipation of Budget Announcement
Events in the Middle East are causing concern for the global economy, adding to worries about ongoing inflation and sluggish growth.
Global financial uncertainty has led the Treasury to lower its growth projections for major economies in advance of the federal budget.
Geopolitical tensions in the Middle East and a slowdown in China have prompted a reassessment of global economies, with Treasurer Jim Chalmers warning of a delicate international outlook.
China’s growth forecast for 2025 has been reduced by 0.25 percentage points to 4.25%, marking the slowest growth period since the country’s economic opening in the 1970s.
The UK’s economic forecast has also been downgraded by 0.5 percentage points to 1.25% in 2025, citing cost of living pressures and a decline in exports post-Brexit.
Japan’s growth outlook for 2024 has been revised down to just 0.75%, a decrease of 0.25 percentage points due to weaker than anticipated consumption.
Ahead of the federal budget in May, Mr. Chalmers has been engaging with G20 counterparts in Washington, highlighting global uncertainty as the reason for adjusted expectations.
“Events in the Middle East are overshadowing the global economy, along with concerns regarding persistent inflation and diminished growth,” he stated.
Further adjustments to growth forecasts are anticipated following the release of US GDP data on April 25 and EU data later in May.
Despite the overall uncertainty, the US economy is predicted to show more resilience than initially forecasted in the near future.
In light of the global uncertainties, the federal treasurer emphasizes the importance of economic security at home.
Mr. Chalmers remains committed to achieving a second consecutive budget surplus in his third budget, prioritizing responsibility and economic security to address escalating risks worldwide.
