(Bloomberg) — Australian businesses will boost investment at the fastest pace in a decade as the economy shakes off the impact of new and old variants of the coronavirus, Treasurer Josh Frydenberg.
The accelerating economic rebound will improve the government’s bottom line, cutting more than A$8 billion ($5.7 billion) from the expected budget deficit for the fiscal year ending June 30, 2022, Frydenberg told the Australian. Business investment is expected to increase 8.5% this fiscal year and 8% in the following one, the Treasurer told the Australian Financial Review.
The central bank on Tuesday predicted a return to the strong growth trajectory seen before recent lockdowns, even as it expressed caution about the potential impact of the omicron variant and held interest rates at a record low. Australia’s economy shrank 1.9% last quarter from a year earlier, beating an expected 2.7% drop as trade and fiscal stimulus helped cushion a slump in household spending.
The government is due to announce on Thursday an update to the 2021-22 budget that it released in May, which had forecast the deficit would narrow to A$106.6 billion, or 5% of gross domestic product, from A$161 billion in the prior fiscal year. Frydenberg’s office didn’t immediately respond to voice mail and email messages outside regular business hours.
Read More: RBA’s Harper Sees Economy Running Hot Without Runaway Inflation
Frydenberg also told the AFR that a consumer spending splurge of up to A$250 billion in pent-up savings would also be a factor in lifting the economy.
More stories like this are available on bloomberg.com
©2021 Bloomberg L.P.
