© Bloomberg. A car drives past a Battery Point restaurant in Hobart, Tasmania, Australia on Monday, September 21, 2020. Tasmania has all but eliminated the coronavirus by cutting itself off from the mainland. But the economic cost to the island, where nearly one in five jobs depends on tourism, is increasing. Photographer: Chris Crerar / Bloomberg
(Bloomberg) – Australia’s budget deficit is set to widen from estimates two months ago due to Melbourne’s new foreclosure, but will be mitigated somewhat by a resilient iron ore price, according to Deloitte Access Economics.
The underlying cash deficit will be A $ 198.5 billion ($ 140.2 billion) in the 12 months to June 2021, compared to the previous estimate of A $ 184.5 billion , Deloitte said Monday. The July Economic and Fiscal Update, which saw an additional A $ 15.6 billion spent to facilitate JobKeeper wage subsidy eligibility and an additional A $ 2 billion to expand telehealth, was released ahead of the lockdowns of phase 4 of Melbourne.
“Still, it’s not all bad news,” said Chris Richardson, a partner at Deloitte. “The Treasury assumed that iron ore prices would drop immediately, almost halving to $ 55 a tonne before Christmas. But they actually rose, trading at double those rates. And the Treasury has been very careful in its other forecasts.
Australia has been rocked by lockdowns and state border controls due to the coronavirus pandemic, with the economy contracting the most in the last quarter and sliding into its first recession in nearly 30 years. An initial recovery, prompted by the early lifting of restrictions and the reopening of the economy, was interrupted by a resurgence of the virus and a new lockdown in Melbourne, the country’s second largest city.
Victoria is now gradually starting to roll out her measurements.
The Oct. 6 budget is likely to “gradually shift gears” from protecting old jobs to creating new jobs, Deloitte said. He expects plenty of infrastructure stimulus that will inject liquidity into the economy and create jobs, including the construction of social housing.
“Various leaks suggest that some elements of this program will be announced on budget night,” Richardson said. “And we particularly appreciate the possibility that wage subsidies will start to shift from protecting old jobs to creating new jobs.”
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