The Australian economy is facing a « dreadful time », with the government planning to cut spending to keep the economy afloat, with some economists forecasting the economy could shrink by more than 1% this year.
The Australian Bureau of Statistics’ annual report on economic activity this year has been published and reveals the country is on course for the lowest rate of growth in four years.
« This report shows the Australian people are deeply worried about the future of our economy, » Treasurer Scott Morrison said in the budget.
« We need to make sure that the next four years of government are not about getting back to the way things were, but about getting our economy moving forward and investing in the future. »
The economy is expected to grow by 0.1% this financial year, down from 0.3% last year, and by 0% in 2018, according to the Bureau of Economics.
But the Reserve Bank expects the economy to grow 2.2% this fiscal year, up from 1.5% in the previous financial year.
The Reserve Bank also expects the next fiscal year to be a stronger one, with a 0.5 percentage point increase to 2.5%.
But the economy will shrink by 1.3 percentage points, according the Bank of Australia, as it is expecting a slower pace of economic growth in 2019 and 2020.
The economy will expand by 0,2% in 2020, down by 0%, and by 1% in 2021, the Reserve Banks latest forecast.
« Our projections suggest that the pace of growth will be weaker in 2021 than it was in 2020, » Mr Morrison said.
« The slowdown will be more noticeable in the longer-term as well as the longer term in terms of the size of the economy. »
There are some other factors in the economy, some things we don’t yet have an accurate picture of.
« It will be a period of very challenging times for our economy. »
But Mr Morrison is hopeful the downturn in the mining sector and the introduction of GST, which will take effect in July, will help the economy recover.
« These things will create a lot of good jobs, they will generate revenue and we will be able to make more money, and in some cases increase income for people, for the rest of the population, » he said.