Australia has performed more strongly than any major advanced economy amid the greatest economic shock since the Great Depression, the Treasurer said in the Mid-Year Economic and Fiscal Outlook.
“The rapid recovery from the Delta imposed lockdowns is expected to see the addition of around one million jobs between October 2021 and the end of the forecast period, which is around 150,000 more jobs than forecast in the 2021-22 budget,” Josh Frydenberg said on Thursday.
“Having performed more strongly than any major advanced economy throughout the pandemic, the Australian economy is poised for strong growth underpinned by Australia’s high vaccination rate and unprecedented economic support to households and small businesses,” the Treasurer continued.
Unveiling better than expected economic outcomes, Mr Frydenberg assured that the Omicron COVID variant is not expected to derail the country’s economic recovery.
“The expectations in the papers today, in MYEFO, is that we’re not going to see Omicron derail the recovery,” the Treasurer said.
As a result, real GDP is expected to grow by 4.5 per cent in 2021, and by 4.25 per cent in 2022.
Consistent with these figures, the unemployment rate is forecast to reach 4.25 per cent in the June quarter of 2023.
“This would represent the first time since before the Global Financial Crisis that Australia has sustained an unemployment rate of below 5 per cent and only the second time since the early 1970s,” the Treasurer said.
The MYEFO also showed minor improvements in the fiscal outlook since the 2021-22 budget, even after accounting for the impacts of the Delta imposed lockdowns.
Namely, the underlying cash balance in 2021-22 is expected to be a deficit of $99.2 billion (4.5 per cent of GDP), a $7.4 billion improvement since the 2021-22 budget. And $2.3 billion stronger across the forwards.
Gross debt is projected to be lower in every year of the forward estimates, reaching 41.8 per cent of GDP at 30 June 2022 and stabilising at around 50 per cent of GDP in the medium term.
“Australia’s gross debt as a share of GDP is less than half the average across G20 advanced countries today, with Australia only one of nine countries in the world to have a AAA credit rating from the three leading rating agencies,” the Treasurer said on Thursday.
“There is also a material improvement in the net debt position which now peaks at 37.4 per cent of GDP as opposed to 40.9 per cent in 2024-25, $65.7 billion lower than what was expected in May,” he added.
As for wages, the MYEFO foresees a slight pick-up of 2.25 per cent in 2021-22, before gradually expanding to 3 per cent by 2023-24.
Maja's career in journalism spans well over a decade across finance, business and politics. Now an experienced editor and reporter across all elements of the financial services sector, prior to joining Momentum Media, Maja reported for several established news outlets in Southeast Europe, scrutinising key processes in post-conflict societies.
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