Strong fundamentals underpin opportunities for growth
The Australian economy is entering its 25th year of economic growth. This is the second longest continuous period of growth of any advanced economy in the world. And it is expected to continue to grow even as we adjust to the end of the unprecedented boom in resources investment.
Employment has been growing, with around 250,000 jobs created over the past 18 months.
Consumers are benefitting from lower petrol prices, electricity prices and interest rates. This is boosting household spending and investment in the housing market.
The outlook globally is brighter with major advanced economies including the United States, the euro area and Japan all expected to strengthen.
India is expected to become the fastest growing major economy this year and while growth in China is moderating from double digit rates seen in the last 10 years, it is still a major contributor to global growth.
The lower Australian dollar will support local businesses taking advantage of the stronger world outlook by making them more competitive, particularly in sectors such as tourism and manufacturing.
Historic free trade agreements will expand opportunities for agricultural exports. Australian services exporters will also gain improved access to major markets, such as China.
But the economic outlook presents challenges for this Budget. With growth in global commodity supply rising at the same time as demand from China cools, prices for our commodity exports have fallen.
The fall in commodity prices has affected business and household incomes and is having a significant impact on Government revenues.