australian budget analysis
Introduction
The 2003-2004 Australian Federal Budget has much more impact on Australia’s economic growth, unemployment and inflation.
The overview of 2003-2004 Australian Federal Budgets is as followed:
Actual Estimates Projections
2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007
Underlying cash balance ($b) -1.0 3.9 2.2 1.3 1.2 4.7
Percent of GDP -0.1 0.5 0.3 0.2 0.1 0.5
Fiscal balance ($b) -3.8 1.5 0.7 -1.1 0.3 2.8
Employment 2.5 1.75 1.5 1.5 1.5
CPI 3.25 2.75 2.5 2.5 2.5
The commonwealth budget-overview 2003-2004 http://www.budget.gov.au/2003-04/overview/html/overview.htm
The purpose of this essay is to analyze the likely impacts the 2003-04 Australian Federal Budget has on the Australian’s economic growth, unemployment and inflation.
Economic growth
Exports
Exports are forecast to increase by 6 per cent in 2003-04, a modest rebound from the flat outcome expected in 2002-03. The mild recovery is expected to be underpinned by subdued global growth and an assumed breaking of the drought.
Over the past year, weak trading partner demand and the effects of the drought have seen export growth stagnate. The exchange rate has also appreciated, with the Trade Weighted Index increasing by around 8 percent over the past year, adding to the drag on export growth.
Although some pick-up in exports is in prospect over the next year, conditions are still far from ideal. Nevertheless, there are welcome signs that the El Niño pattern has ended and that there will be at least average levels of rainfall over much of Australia in the coming year. While this should result in a recovery in rural production and exports, the outcome will also depend on a number of other factors: the timing of the rain; the distribution of rainfall; and subsoil moisture conditions. In the near term, further falls in farm production are in prospect.
Exports of elaborately transformed manufactures (ETMs) and services are highly sensitive to economic conditions in Australia's major trading partners. Following recent weak outcomes, ETM exports are forecast to pick up a little over the course of 2003-04, in line with the expectation of only modest growth in Australia's major trading partners, and against the mild drag from the appreciation of the exchange rate.
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