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AAP has a treasury update:

The treasury and finance departments believe the Australian economy remains strong despite significant global headwinds, including widespread inflation and the war in Ukraine.

department secretaries steven kennedy Y Rosemary Huxtable signed the pre-election fiscal and economic outlook (PEFO) on Wednesday, as part of the budget honesty letter that was submitted by former Liberal Treasurer Peter Costello.

His independent assessment of the federal government’s financial books proved a bit different from the budget provided by Treasurer Josh Frydenberg last month.

“The economic and fiscal outlook has not materially changed since the publication of the 2022/23 Budget,” says PEFO.

“Although there have been recent movements in some economic indicators, taking into account all available information, our judgment is that these have not materially altered the economic and fiscal outlook.”

PEFO’s forecast for the deficit for FY 2021/22 was $79.8 billion, the same as in the budget, but for 2022/23 it is now a smaller fraction at $77.9 billion compared to $78 billion in the budget.

Going forward, the deficit for 2025/26 is now $42.9 billion instead of $43.1 billion, while other deficit projections were left unchanged.

The report estimates that the policy decisions made since the budget amount to $1.3 billion, although these were partially offset by the reversal of a series of decisions made earlier but not yet announced.

The contingency reserve has been reduced from budget by $338.4 million over the four years to 2025/25, including a partial reduction in the provision for potential long-term response costs to the February-March floods in parts of New South Wales and Queensland. .

The economic forecasts for growth, unemployment, inflation and wages in PEFO were the same as in the budget.

These include predictions for 2022/23 of economic growth of 3.5% in 2022/23, an unemployment rate of 3.75%, inflation of three percent and wage growth of 3.25%.

“As an energy and food exporter with very limited direct trade exposure to Russia and Ukraine, Australia is relatively well positioned to weather the effects of the Russian invasion of Ukraine,” says PEFO.

He says recent record prices for major export commodities will boost Australia’s earnings in the short term, although high global oil prices are being reflected in higher prices for gasoline and other consumers.

“While markets expect interest rates to normalize in the coming years, household and business cash savings are expected to be substantially higher than at the start of the pandemic for domestic demand to remain resilient.” , He says.

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