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A steady hand

By Michael Knox - posted Wednesday, 13 May 2015


Compared to the recent outlook provided by the RBA, the Treasury outlook appears almost optimistic. GDP growth is still a somber 2.5% in 2014/15. Still, it rises to 2.75% in 2015/16. It then rises again to 3.25% in 2016/17. The result of this acceleration in growth is that employment rises from 1.5% in 2014/15 and 1.5% again in 2015/16 to 2% in 2016/17. This allows unemployment to rise slightly to 6.5% in 2015/16. Unemployment then declines to 6.25% in 2016/17.

Wages growth is relatively slow and stable. Wages should grow by 2.5% in 2014/15. They should grow again by 2.5% in 2015/16. This wages growth should rise slightly to 2.75% in 2016/17.

Conclusion

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This budget keeps outlays steady. At the same time, the budget provides support to the small business sector. The objective is to support small business employment growth.

Should things go well, the economy will recover and rising tax receipts will reduce the deficit.

We hope that things go well.

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This article was first published in Morgan's Economic Strategy.



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About the Author

Michael Knox is Chief Economist and Director of Strategy at Morgans.

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All articles by Michael Knox

Creative Commons LicenseThis work is licensed under a Creative Commons License.

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