The federal government is forecasting a rebound in the economy after what it has called a temporary slowing in the current financial year.
The 2017 budget papers anticipate that growth will lift following the effects of a number of weather-related events in 2016-17.
Real GDP growth is expected to be 2.75% in 2017-18, up from 1.75% this year, and 3% in 2018-19.
“Australia’s economic performance continues to compare favourably with most advanced economies, including other major commodity exporters,” according to the budget papers.
“The lift in economic growth is expected to occur as the drag from falling mining investment diminishes and as growth in household consumption and non-mining business investment improves.
“Exports are also forecast to continue to grow, supporting greater economic activity and growth.”
forecasts show the employment rate at 5.75% this financial year and 5.75% next year, only dropping to 5.5% in 2018-19.
Wages are predicted to rise from 2% this year to 2.5% next year and 3% the following year.
The budget papers point to encouraging signs of stronger growth in a range of countries and tentative signs that world trade is firming after unusually weak growth in recent years.
“Chinese GDP growth has ticked up in early 2017 and the US economy is performing well,” according to the budget’s economic forecasts.
“There have also been signs of improvement in other advanced economies and in some of the emerging economies that were affected by previous sharp falls in commodity prices.
“Despite generally sluggish growth in the past few years, some major advanced economies have been growing sufficiently strongly to push down their unemployment rates.”
However, the budget is assuming little improvement in the short term in unemployment in Australia.
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