Financial News: Australia Budget To Slip Into Deficit In 2024-25

Australia Budget To Slip Into Deficit In 2024-25

12/18/2024 - 03:09:00 (RTTNews)

(RTTNews) - Australia's budget is forecast to slip into deficit in 2024-25 after recording back-to-back surpluses for the first time in almost two decades, Treasurer Jim Chalmers said Wednesday.

In the latest Mid-Year Economic and Fiscal Outlook, the government projected a deficit of A$26.9 billion for 2024-25. However, this was A$1.3 billion smaller than projected in the budget.

The government cited challenging economic conditions and unavoidable spending as the primary drivers for the deterioration in the fiscal position. Tax receipts have been revised downwards, reflecting weaker commodity volumes amid emerging challenges in the Chinese economy.

The budget deficit is forecast to climb to A$46.9 billion or 1.6 percent of gross domestic product in 2025-26. It is estimated to narrow to A$38.4 billion in 2026-27 and then to A$31.7 billion in 2027-28.

The budget balance is projected to reach a surplus only in 2034-35.

The government said the underlying cash balance is projected to improve over the medium term, returning to balance by 2034-35.

The medium-term fiscal outlook is broadly unchanged since the 2024-25 Budget with spending pressures and higher borrowing costs offsetting improvements in receipt.

Further, growth in Australia is expected to increase from 1.4 percent in 2023-24 to 1.75 percent in 2024-25, and then 2.25 percent in 2025-26, the treasurer said.

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