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Budget 2016: Economic Overview

May 2016

How is the Australian economy shaping up at Budget time? 

  • Real GDP - forecast to grow by 2.5% in 2015-16 and 2016-17, before increasing to 3% in 2017-18.
  • Deficit – Underlying cash deficit forecast to be $37.1 billion in 2016-17.
  • Employment growth – 1.75% in 2016-17 and 2017-18.
  • Unemployment – expected to be 5.75% in 2015-16, then decreasing to 5.5% in 2016-17 and 2017-18.
  • Household consumption – forecast to grow consistently at 3% 
  • Consumer Price Index – 1.25% in 2015-16, before increasing to 2% in 2016-17 and 2.25% in 2017-18.
  • Wages growth – is expected to remain moderate at 2.25% in 2015-16, before increasing to 2.5% in 2016-17 and 2.75% in 2017-18.
  • Tax receipts – forecast tax receipts since the 2015-16 Mid Year Economic Review are down $13.5 billion - currently trending below average as a share of GDP but forecast to return to average levels in 2017-18.  The lower tax take is predominantly from superannuation funds and individuals. 
  • Business investment - dominated by shrinking mining investment which is expected to fall by 27.5% in 2015-16 and 25.5% in 2016-17.
  • Exports  - Total exports expected to increase by 6% in 2015-16, 5% in 2016-17 and 5.5% in 2017-18.
    • Non-rural commodity exports expected to grow by 7% in 2016-17 and 7.5% in 2017-18 as iron ore and LNG production continues to ramp up.
    • Strength of trading partners - Australia's major trading partner growth is forecast to remain higher than global growth, at 4% across the forecast period:
    • China is forecast to grow at 6.5% in 2016, 6.25% in 2017 and 6% in 2018. 
    • India is forecast to grow at 7.5% in 2016-17, rising to 7.75% in 2018.
    • The US is expected to grow at 2% in 2016, rising to 2.25% in 2017 and 2018.
    • The Euro area growth is forecast at 1.5% over the next three years.

More Information

For more information about the 2016 Federal Budget, click on the links below or contact us on 02 9957 4033. 

Budget 2016




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Disclaimer

This article is provided for information purposes only and correct at the time of publication. It should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.

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