Australia: Budget position to be upgraded - Westpac

Analysts at Westpac point out that for the Australian economy, the Treasurer will release the Federal Government's Mid-Year Economic & Fiscal Outlook (MYEFO) on Monday of next week, December 17.

Key Quotes

“The update will reveal an improved budget position - largely higher tax revenue - on stronger national income growth, a robust labour market and, to date, an undershoot on expenditures.”

“The MYEFO budget profile may be in the order of: -$4.5bn; +$7.2bn; +$16bn; and +$21.6bn. The upgrade in the initial year is $10bn, with an upgrade of $5bn from 2019/20.”

“We expect a revised nominal GDP growth profile of: 5.0% (upgraded by 1.25%); 4.25% (downgraded by 0.5%); 4.5% and 4.5%.”

“On the economic front, key downside risks are the unfolding domestic housing downturn (with potential negative spill-over effects) and global trade tensions.”

“The upcoming Federal election, due by 18 May 2019, is a key event risk. It remains to be seen how generous spending and tax promises will be ahead of polling day. Of significance is the impact of measures on the budget position over the medium-term, as well as any immediate costs.”