The Australian economy is growing strongly, with unemployment set to fall further and the budget on track to return to surplus in 2012‑13.
The combination of a strengthening economy and spending discipline from the Government's fiscal strategy is forecast to produce Australia's fastest fiscal consolidation in more than 40 years.
The projected return to surplus in 2012‑13 has been maintained despite the impact of a higher Australian dollar weighing on expected tax receipts.
Real GDP is forecast to grow by 3¼ per cent in 2010‑11 and 3¾ per cent in 2011‑12, with the unemployment rate expected to fall to 4½ per cent by the June quarter 2012.
While strong growth in emerging Asian economies is underpinning high prices for Australia's key commodity exports, uncertainty around the growth prospects for many of the world's major economies is introducing considerable volatility into commodity and currency markets.
As the impact of the higher Australian dollar on forecast tax receipts is already showing, the budget is sensitive to these developments. Continuing to deliver the fiscal strategy will help provide an important buffer against any further volatility.
The forecast underlying cash deficit for 2010‑11 is $41.5 billion (3.0 per cent of GDP), returning to a surplus of $3.1 billion (0.2 per cent of GDP) in 2012‑13. Table 1.1 presents the fiscal and underlying cash balances for 2010‑11 to 2013‑14.
Table 1.1: Budget aggregates
- Excludes expected Future Fund earnings.
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