Australia is set to revise downwards the growth outlook for many of the world's major economies in its upcoming budget announcement, according to Treasurer Jim Chalmers. The impact of recent events in the Middle East has added to existing concerns around inflation and weakening growth trends globally. This dimmer economic landscape was a key focus of discussions held by Chalmers with international counterparts and central bank leaders during his recent participation in meetings of the G20 finance ministers, the IMF, and World Bank in Washington.
The Australian treasury department is expected to make adjustments to GDP forecasts for key trading partner China, as well as for India, Japan, the UK, and the US in the upcoming budget update. Specifically, China is forecasted to see a modest growth rate of around 4% for this year, 2025, and 2026, marking a subdued period of expansion compared to its rapid economic growth in previous decades since opening up its economy in the late 1970s.
Among the revisions, Japan's projected growth for 2024 has been revised downward by 0.25% to 0.75% due to weaker-than-expected consumption data. Recent figures showed a decline of 0.5% in Japanese household spending for February, extending a trend of contraction that has persisted for 12 consecutive months.
Despite the challenging global economic environment, Chalmers remains optimistic about Australia's fiscal position. He recently indicated that the country is on track to achieve a second consecutive surplus, setting an optimistic tone for the upcoming budget announcement scheduled in less than four weeks' time. This indicates that amidst the uncertainties in the global economic landscape, Australia is aiming to maintain a strong financial position and navigate through the challenges ahead.