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Government of Australia

(Federal/State Govt. / Local Govt./Govt. Bodies) Canberra AUSTRALIA
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Australia slashes growth, surplus forecasts    
Australia on Wednesday slashed economic growth and budget surplus forecasts due to the global financial crisis, and predicted a rising jobless rate, although it expected the economy to continue to grow.?

The government said in its mid-year review of budget forecasts that economic growth would slow to 2.0 percent in the year to June 2009 due to the global downturn, down from 2.75 percent forecast in the May 13 budget. Growth for 2009/10 was revised to 2.25 percent from a budget forecast of 3.0 percent.?

The budget surplus for the year to June 2009 was now projected to be A$5.4 billion ($3.8 billion), or 0.4 percent of GDP, down from a forecast in the budget of A$21.7 billion or 1.8 percent of GDP. "The global financial crisis has smashed a A$40 billion hole in the budget," Treasurer Wayne Swan told a news conference.?

"This is yet another dramatic reminder that we are not immune from the impact of the global financial crisis." Employment growth was also forecast to slow, with the unemployment rate to climb to 5.0 percent on a year average by mid-2009, from near 30 year lows around 4.3 percent in the September quarter.?

The jobless rate would hit 5.75 percent by mid-2010, Swan said. The downward revisions come despite Australia's central bank aggressively cutting interest rates by 2 percentage points since September. The government also announced a A$10.4 billion stimulus package last month, aimed at cushioning the economy from the global downturn.?

Australia's economy is in its 17th year of economic expansion, fuelled in part by China's demand for Australia's resource exports. "We believe growth will remain positive," Swan said. The updated budget forecasts suggest exports will remain strong despite the global conditions, with goods and services exports to rise 6.5 percent in 2008/09, up from the May budget forecast of 6.0 percent.?

But the crisis would have a dramatic impact on the government's budget surplus, which will fall further to A$3.6 billion in 2009/10 from an original forecast of A$19.7 billion, and to A$2.6 billion in 2010/11 from a forecast A$19.0 billion.?

Swan said tax receipts were expected to be about A$40 billion lower this year and over the coming three years due to the global crisis. "Almost all of the decrease in the surplus beyond 2008/09 is due to the significant reductions in revenue associated with the global financial crisis," Swan said.
Government of Australia 's City : Canberra
Government of Australia 's Country : AUSTRALIA
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