Mid-Year Economic and Fiscal Outlook (MYEFO) 2023-24

13 December 2023

Treasurer Jim Chalmers and Minister for Finance Katy Gallagher released the Mid-Year Fiscal and Economic Outlook (MYEFO) today, revealing that Australia’s fiscal position has improved by $12.8 billion since the Federal Government’s Budget was released in May. The Government has attributed the improvement to its fiscal restraint and continued focus on reprioritisations and savings.

The MYEFO confirms the Government will deliver a deficit of $1.1 billion this financial year, down from the $13.9 billion estimated in the Budget. The Government is also projected to deliver budget deficits across the forward estimates. Net debt is projected to fall to $491 billion in 2023-24, which represents 18.4 per cent of GDP, but increase across the forward estimates and medium term. The Treasurer and Minister for Finance stated it would avoid $145 billion over 12 years to 2033-34 in interest costs on debt by returning the vast majority of revenue upgrades to the budget.

Economic growth is expected to rise by 1.75 per cent in 2023-24, with further improvements by 0.5 per cent expected by 2024-25 to reach 2.25 per cent. The Treasurer observed that GDP growth is forecast to moderate in the near term as pressures weigh on domestic activity, including high inflation, increased interest rates, and uncertainty in the global economy.

The mid-year budget update also reveals that state government GST revenue will decrease by $2.1 billion over four years to 2026­-27, including $1.9 billion this financial year.

While the MYEFO shows that labour market conditions remain strong, the unemployment rate is expected to increase by 0.65 per cent to 4.25 per cent this financial year, while remaining relatively steady over the forward estimates. Wage growth has also been upgraded to 4 per cent this financial year.

The mid-year budget update includes an additional $5.3 billion in spending, including $575.5 million over 11 years to support the nuclear-powered submarine program, $285 million to acquire 78 Bushmasters to replace those gifted to Ukraine, and an additional $186.6 million over two years to deliver assistance to Ukraine. Additionally, the Government will provide $300 million over five years to support the Government’s ‘2023-2030 Australian Cyber Security Strategy’.

The Government has indicated that its spending builds on the Government’s economic plan by taking the pressure off Australians, building the future economy, strengthening Medicare and essential services, and securing Australia’s place in the world.

Key economic indicators

  • Real GDP is forecast to rise by 1.75 per cent in 2023-24, down from 3.1 per cent in 2022-23.
  • Unemployment is forecast to rise to 4.25 per cent.
  • An underlying cash deficit of $1.1 billion is expected in 2023-24, while the underlying cash balance improves by a cumulative $39.5 billion.
  • Net debt is projected to fall to $491 billion in 2023-24, 18.4 per cent of GDP, and will increase over the forward estimates.

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