Australia’s Treasurer, Jim Chalmers, has issued a warning about the impact of events in the Middle East on the global economy. He stated that concerns about inflation and weaker growth are being compounded by the situation in the region. This will influence the government’s budget decisions in May, with downgrades to major trading partners expected.
Chalmers recently attended G20 finance ministers and central bankers meetings in Washington, where he discussed the challenges facing the global economy. He emphasized the need for responsibility and security in the upcoming budget, noting that addressing cost-of-living pressures, budget repair, and economic reform are crucial in light of escalating global risks.
The treasury is planning to revise its growth forecasts for key economies like China, Japan, and Britain. While the growth forecast for China in 2024 will be slightly raised to 4.75%, next year’s forecast is expected to be cut by 0.25 percentage points to 4.25%. Japan’s growth forecast for this year has also been lowered by 0.25 percentage points to 0.75%.
Despite expectations of a budget surplus for the year ending June 30, the government anticipates a smaller revenue upgrade compared to last year’s predictions due to falling commodity prices and a softened labor market. These factors will shape government decisions on spending and taxation in coming months.
