SYDNEY (Reuters) – Australia’s recently-elected Labor government took a scalpel to economic growth forecasts on Thursday, warning soaring inflation and higher interest rates represented a once-in-a-decade challenge.
Speaking before parliament, Treasurer Jim Chalmers cut forecasted economic growth by half a percentage point for this fiscal year and next, He also predicted inflation would now peak at 7.35% rather than the 4.25% forecasted by the previous government back in March.
The budget deficit, however, would be far lower than forecast thanks to sky-high prices for many of Australia’s major commodity exports and a surprisingly sharp drop in unemployment to a 48-year trough of 3.5%.
(Reporting by Wayne Cole; Editing by Jacqueline Wong)
