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Account surplus ‘like dating Miley Cyrus’: Deloitte report
Two rate cuts and an inability of the Morrison government to keep up its current account surplus won’t be enough to plunge the Australian economy into disaster territory, according to new analysis.
Account surplus ‘like dating Miley Cyrus’: Deloitte report
Two rate cuts and an inability of the Morrison government to keep up its current account surplus won’t be enough to plunge the Australian economy into disaster territory, according to new analysis.
The report from Deloitte Access Economics has noted how commodity prices are already easing off their mid-2019 peaks, making the government’s surplus slogan looking less likely to be maintained in the coming year.
Chris Richardson, lead author of the report, even poked fun at the election promise, commenting how Australia’s “much vaunted account surplus is a bit like dating Miley Cyrus – lots of fun, but unlikely to last”.
Despite this prediction, Mr Richardson said he expects some good news to stick around, even with his simultaneous forecast of two more federal rate cuts in the coming year.
“Commodity export volumes have skyrocketed, and they’ll remain elevated,” he advised.
This, combined with the huge fall in long-term interest rates across 2019, has left the consultancy firm partner expecting big savings on the near-term servicing of the nation’s trillion-dollar foreign debt.
Noting that the weak economy coupled with stubborn inflation is taking a toll on finances at both a federal and state level, Mr Richardson conceded that “wobbly wage growth plus falling housing construction hurts state GST monies”.
While praising the states for their continued infrastructure spending despite the economic downturn, the Deloitte partner noted that the Feds are also now dealing with “a cyclical downswing in profits and structural woes in wages”.
“But, the latest federal budget update was very conservative,” Mr Richardson did counter and assumed “commodity prices (such as iron ore) will dive even faster than Ronaldo in the World Cup”.
“That conservatism says that, despite a range of bushfire-related costs, there’s a chance that the Feds may have happier news to report by the time May’s budget rolls around.”
On the report's release, the shadow treasurer came out in attack of the current government's economic policies and planning.
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