Australia’s jobs market is expected to deteriorate next financial year following a slightly weaker economy, according to forecasts in the 2014 budget.
The economy is forecast to grow slightly below trend, with a large fall in resources investment partly offset by a boost from higher resources exports and the household sector’s response to low interest rates.
By the June quarter 2015 the unemployment rate is forecast to reach 6.25% and remain at this rate until the end of 2016.
The underlying cash deficit is expected to be $29.8 billion in 2014-15, around 1.8% of Gross Domestic Product. This is an improvement on the $33.9 billion projected in the mid-year financial review but is at the higher end of market economist forecasts of $26 billion to around $30 billion.
The deficit is expected to fall to $2.8 billion (0.2% of GDP) in 2017-18. The underlying cash balance is expected to reach surplus around the end of the decade, and by 2023-24 the surplus will reach more than 1% of GDP.
Australia’s economy is in the midst of a major transformation, moving from growth led by investment in resources projects, to broader-based drivers of activity in non-resources sectors.
This is occurring at a time when the economy has generally been growing below its trend rate and the unemployment rate has been rising. However, the near-term outlook for the household sector has improved since the mid-year economic outlook.
Here’s the forecasts according to the budget: