AAP
Economists believe Australia's top line triple-A credit rating is safe, even if the federal government ditches its much promised surplus for this financial year.
Treasury has reportedly advised the government to dump its commitment to a surplus, warning a slump in nominal economic growth poses a threat to revenue.
Shadow treasurer Joe Hockey accused the government of organising the leak, saying it was using Treasury to do its "political heavy lifting".
"Stop the games, come clean on the real state of the budget," he told reporters in Sydney on Thursday.
Finance Minister Penny Wong said she would not respond to every piece of budget speculation.
"We've just handed down our mid-year review, which has us on track to return to surplus," she told reporters in Sydney.
But she acknowledged that nominal gross domestic product in last week's national accounts, as well as the global economy and lower commodity prices, had made the government's budget position "more difficult".
The government has promised a surplus in 2012/13 after being forced to go into deficit during the 2008-2009 global financial crisis.
The surplus forecast has been cut back slowly, and was predicted to be a slim $1.1 billion in the mid-year budget review released in October.
Westpac chief economist Bill Evans said when a surplus was originally promised, the sort of fall that has been seen in commodity prices wasn't envisaged, but it was probably the wrong time for more budget savings because of their impact on confidence.
But neither did he expect credit rating agencies to react negatively if the government shelved a surplus, given Australia's "extraordinarily strong" debt position.
"I don't think Australia's rating is in any doubt," he said.
Australian Chamber of Commerce and Industry (ACCI) chief economist Greg Evans supports a balanced budget over the economic cycle, but not "at all costs" to the economy.
The latest ACCI-Westpac industrial trends survey for the December quarter released on Thursday showed that while overall activity was reasonably stable, profit expectations, investment, selling prices and employment were all under pressures.
The survey's composite index declined to 50.7 points in the December quarter from 51.9 points in the September quarter, only just holding above the 50 point mark that separates expansion from contraction in the manufacturing sector.
Forward indicators pointed to only modest growth in the March quarter 2013.
"It is disappointing to us that there hasn't been a greater impact of lower interest rates feeding through to the economy," Greg Evans told reporters in Canberra.
Bill Evans said the overwhelming concern for manufacturers was a high Australian dollar.
"We can't be optimistic about relief from the currency," Bill Evans said.
He said actions by the US Federal Reserve on Wednesday, in a further attempt to stimulate the economy through so-called quantitative easing (QE4) or simply printing money, would weaken the US dollar, while raising the value of other currencies, including the Australian dollar.
Separately, the Melbourne Institute's December consumer inflationary expectations survey predicted a consumer price index rise of just 1.8 per cent in the next 12 months, down from 2.2 per cent in November.
This is below the Reserve Bank's two to three per cent target band, and the lowest survey result since September 1997.
AAP cb/klm/je
No comments:
Post a Comment