Returning from Washington, the treasurer warned of a precarious global outlook, citing slower growth forecasts for China, Britain and Japan in the May budget.
Already a subscriber?Jim Chalmers says the Middle East conflict and sticky inflation will dampen economic growth among key trading partners, as economists warn the treasurer faces a “tricky balance” to keep the economy going without stoking prices.
The quarterly pace of inflation is expected to have edged higher in the first three months of the year, but the annual figure is forecast to fall from 4.1 per cent to 3.4 per cent due to base effects. Barrenjoey is tipping the Australian economy was now at its weakest point and would remain subdued for the next four to five months before the July tax cuts kick in to help stave off a really sharp slowdown later this year.
On the spending side, the budget is expected to include more money for combatting family, domestic and sexual violence to fight what Attorney-General Mark Dreyfus labelled “a crisis of male violence”. Growth in Japan is also expected to be a quarter of a percentage point lower this year at 0.75 per cent, before edging up to 1 per cent in 2025 and 2026.
But due to the base effects of a much larger 1.4 per cent rise in the March 2023 quarter, the annual price rise figure is expected to be smaller than the 4.1 per cent rise at the end of last year, at about 3.4 per cent.
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