Budget 2022: Chalmers forecasts inflation and economic growth

Budget inflation Chalmers interest rates

26 October 2022
| By Laura Dew |
image
image
expand image

In his first Budget speech, Treasurer Jim Chalmers has warned inflation will peak at 7.75% by the end of the year.

Announcing the first Labor budget in almost a decade, Chalmers announced the macroeconomic conditions and forecasts of the Australian economy.

“The global economy teeters again, on the edge – with a war that isn’t ending, a global energy crisis that is escalating, inflationary pressures persisting, and economies slowing – some of them already in reverse,” he said.

“All of this is now reflected in the updated forecasts for global growth – downgraded since the March Budget for this year, next year, and the following year.

“But while we intend to avoid the worst of the turbulence from overseas, we cannot escape it completely. Global challenges, along with high inflation and higher interest rates, will have an impact.”

In 2022/23, the underlying cash deficit was expected to be $36.9 billion, and gross debt as a share of the economy was expected to be 37.3% of GDP, 5.1 percentage points lower compared to estimates before the election.

Inflation was forecast to peak at 7.75% by the end of 2022, before easing to 3.5% in 2023/24. As wages grew more strongly and inflation moderated, the Government expected real wages to start growing again in 2023/24.

The economy was expected to grow by 3.25% over 2022/23, before slowing to 1.5% in 2023/24 as global challenges and cost-of-living pressures weighed on households and the economy.

In the short-term, Chalmers said the Government’s focus was to limit growth on spending while inflation was high, return as much of its revenue upgrades and focus spending on investments that would grow the capacity of the economy.

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

This verdict highlights something deeply wrong and rotten at the heart of the FSCP. We are witnessing a heavy-handed, op...

1 day 20 hours ago

Interesting. Would be good to know the details of the StrategyOne deal....

6 days 2 hours ago

It’s astonishing to see the FAAA now pushing for more advisers by courting "career changers" and international recruits,...

3 weeks 4 days ago

Insignia Financial has made four appointments, including three who have joined from TAL, to lead strategy and innovation in its retirement solutions for the MLC brand....

2 weeks 6 days ago

A former Brisbane financial adviser has been charged with 26 counts of dishonest conduct regarding a failure to disclose he would receive substantial commission payments ...

5 days ago

Pinnacle Investment Management has announced it will acquire strategic interests in two international fund managers for $142 million....

4 days 3 hours ago