Australia Cuts Forecasts for Wage Increases, Economic Growth and Budget Surplus

Australia’s mid-year budget update showed economic reality is starting to bear down on the government’s finances, Bloomberg News reported. Treasury lowered its forecast surplus for the 12 months through June 2020 to A$5 billion ($3.4 billion) from April’s budget estimate of A$7.1 billion as it scaled back estimated tax revenues, according to the Mid-Year Economic and Fiscal Outlook released in Canberra on Monday. It also predicted narrower surpluses for the following three fiscal years. Treasurer Josh Frydenberg also cut his forecasts for gross domestic product and wages growth this fiscal year, though dismissed concerns about the slowing economy and resisted calls for additional spending to support growth. “With the budget back under control, our fiscal strategy now focuses on paying down Labor’s debt with sustainable surpluses over the cycle,” Frydenberg told reporters after the release, referring to the opposition Labor party that lost office in 2013. If Frydenberg does manage to return the books to the black, it would be the first time since before the 2008 global financial crisis. By sticking to a traditional conservative government playbook of trying to pay down debt, he’s flying in the face of a growing global chorus calling for looser fiscal policy, most recently with government stimulus programs announced in New Zealand and Japan. Read more.