Australia likely to achieve 2.5% growth in 2015/16

Australian Federal Treasurer Morrison released the Mid-Year Economic & Fiscal (MYEFO) document for 2015-16 today. Lower commodity prices and expectation of  a weaker growth rate hit the country's budget. The Australian government anticipates the deficit of the economy for 2015/16  to reach $37.4 billion, which is $2.3 billion rise on the May Budget. 

Due to poor economic growth, receipts have been revised down by $33.8 billion. However, the deficit is expected to narrow down in coming years, as the economic outlook of the economy is expected to improve.

"Real GDP growth is forecast to be 2.5% in 2015/16, downgraded from 2.75%; lifting to 2.75% in 2016/17, down from 3.25% at Budget time. The terms of trade forecasts are moderately weaker for this year and next, reflecting the downside surprise in global commodity prices. Nominal GDP growth is forecast to be a soft 2.75% this year (down from 3.25%) and below par in 2016/17 at 4.5% (lowered from 5.5%). Net public debt increases to 18.5% of GDP in 2017/18, revised up from a peak of 18.0% at Budget time. Gross bond supply reaches $552bn (28.9% of GDP) by June 2018, revised up from $521bn", notes Westpac.