Treasurer to lift growth in budget review

Colin Brinsden, AAP Economics and Business Correspondent
(Australian Associated Press)

Treasurer Josh Frydenberg says the government’s forecast for economic growth next year will be stronger then predicted in the May budget when he hands down his mid-year review later this month.

The treasurer confirmed last week the mid-year economic and fiscal outlook will be released on December 16.

Last week the national accounts showed the economy contracted by 1.9 per cent in the September quarter as a result of the COVID-19 Delta lockdowns in the nation’s two largest states, NSW and Victoria.

It was the third largest quarterly contraction on record.

But Mr Frydenberg said the economy is coming back strongly with 350,000 jobs added to the workforce since the start of September and retail sales rebounding with more than $5 billion spent at the recent Black Friday sales alone.

He also told the ABC’s Insiders program that a stronger growth forecast will come as a result of having one of the highest vaccination rates and lowest mortality rates in the world.

He also noted that the Organisation for Economic Cooperation and Development now expects Australia to grow by 4.1 per cent in 2022 and the Reserve Bank of Australia is predicting 5.5 per cent growth.

In May, Mr Frydenberg had forecast growth of 4.25 per cent for the 2021/22 financial year and 2.5 per cent for 2022/23.

“We’ll make those upgrades to our forecasts in MYEFO,” the treasurer said.

New predictions come at a time of uncertainty surrounding the new coronavirus Omicron variant.

“It’s too early to make any conclusive decisions or estimates about the economy as a result of Omicron,” Mr Frydenberg said.

He said what is known is that it is highly transmissible but there are also early signs it may be less severe than the Delta variant and no evidence as yet that the vaccines currently being used are not a defence against it.

“I don’t think we should be panicking,” he said.

“I think everyone should keep their heads and we should be calmly and safely reopening as we have been.”