ASX 200 Index: Shares move up on Aussie budget announcements
The ASX 200 index has popped on the back of Wall Street and despite the 'eye-watering' Australian budget deficit forecasts 2020-2021 and a Jobless Rate of 8.75%.
Key numbers
Here are some key points from the federal government’s economic update, according to a press release issued by Josh Frydenberg and Mathias Cormann:
- The underlying cash balance is forecast to decrease from balance in 2018-19 to a $85.8 billion deficit in 2019-20 and a $184.5 billion deficit in 2020-21.
- Net debt is expected to be $488.2 billion (24.6 per cent of GDP) at 30 June 2020 and increase to $677.1 billion (35.7 per cent of GDP) at 30 June 2021.
- Despite the support to the economy from the measures the Government has taken, real GDP is forecast to have fallen sharply in the June quarter by 7 per cent.
- However, the easing of health restrictions in line with the health advice is expected to deliver an increase in economic activity from the September quarter and beyond.
- On a calendar-year basis, real GDP is predicted to grow by 2½ per cent in 2021, after a fall of 3¾ per cent in 2020.
- The unemployment rate is forecast to peak at around 9¼ per cent in the December quarter although labour market conditions are expected to strengthen beyond 2020.
Frydenberg told reporters that Australia had faced a “health and economic crisis like nothing we have seen in the last 100 years” and the economy had taken a big hit.
He said every resource had been marshalled by the government to defend the nation from the impact of the coronavirus.
We can see the mountain ahead and Australian begins the climb. We must remain strong, we must draw strength from our resilience as a nation and a people. We will get through this.
Cormann, the finance minister, added:
So yes we find ourselves in a very challenging fiscal position but we need to keep things in perspective. We are in a better, stronger, more resilient position than most other countries around the world.