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Australia's Budget Blows Out as Growth Slows, Iron Ore Slumps

  • Forecast for iron ore price cut by almost 20% to $39 a ton
  • Budget poses challenge as government enters election year
Bloomberg business news

Why Australia's Budget Blow Out May Not Be So Bad

Updated on

Australian Treasurer Scott Morrison is reframing the government’s economic narrative toward growth and jobs and away from austerity, bowing to the fiscal reality of plunging commodity prices and recession-level wage growth.

The government’s chief economic minister Tuesday pushed out an expected return to surplus in a mid-year update of the May budget and announced deficits would be A$26.1 billion ($18.9 billion) wider over the next four years. He also downgraded the forecast price for Australia’s biggest export, iron ore, by almost 20 percent as supply surges and growth in key trading partner China slows.