Australian Budget to Show A$35b Deficit for 2016-17: Economists

Australian Treasurer Scott Morrison will reveal a slightly wider budget deficit on Tuesday than he forecast six months ago, economists anticipate.

The government will project a deficit of A$35 billion ($26.8 billion) for the year through June 2017, according to the median forecast of 17 economists surveyed by Bloomberg. That compares with a December estimate of A$33.7 billion. Morrison will also lift the net debt forecast to 18.5 percent of gross domestic product from 18.3 percent, according to the median result of 10 economists.

Australia’s economic transition away from mining is coming under pressure from a resurgent currency, with the nation also vulnerable to global growth concerns. While a rebound in iron ore may provide a short-term boost to government revenue, the combination of China’s slowdown, still low commodity prices and weak wages growth are likely to weigh on the overall take.

The government has also been unable to pass a number of budget savings measures through the Senate, where it lacks a majority, making its goal of returning the budget to surplus even more difficult. An election of both houses of parliament is expected to be called shortly after Tuesday’s budget.

Economists’ forecasts for the budget deficit were between A$25 billion and A$38 billion. Net debt was predicted within a range of 17 percent and 19 percent of GDP.

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