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Budget economic forecasts show Govt is hoping market forces will do ‘heavy lifting’: Pitcher Partners

Posted on May 13, 2015

The economic forecasts contained within tonight’s Federal Budget appear to be measured, with a GDP forecast of 2.75% for 2015-16.

Unemployment is forecast to remain at around 6.5%.  Assuming the small business tax cuts and incentives for start-up businesses are sufficient to improve business sentiment, these forecasts appear prudent. The budget papers predict GDP to rise to 3.25% in 2016-17.  Based on the current uncertain outlook for global and Australian economies, this forecast appears to be excessive.  Without many long-term significant incentives to generate growth, it seems that the government is hoping that market forces will do the ‘heavy lifting’.  While lower taxes, energy prices and interest rates will support business, a boost to consumer and business confidence is required to begin driving growth above 3%.

Comment from David Lane, Director of Wealth Management at Pitcher Partners on Federal Budget 2015