Budget 2022: Chalmers forecasts inflation and economic growth
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.
AUTHOR
Laura Dew
Recommended for you
While model figures provide valuable insights on how advisers can draw benefits from managed accounts, Zenith’s head of portfolio solutions has argued that professional judgement and quality research are key to successful implementation.
While the number of financial services staff using AI has almost doubled in the last year, two surveys have revealed that fast-paced AI adoption has led to governance gaps and growing concerns about job security.
Entireti has partnered with Striver to connect graduates and job seekers with its advice network to support the placement of new talent.
ASIC has cancelled the Australian financial services licence of Ivy League Capital Pty Ltd, a firm authorised to provide advice in relation to managed investment schemes.
