Mid-Year Economic and Fiscal Outlook (MYEFO)
Mid-Year Economic and Fiscal Update (MYEFO)
Treasurer Josh Frydenberg and Minister for Finance Simon Birmingham today delivered the Mid-Year Economic and Fiscal Update (MYEFO), declaring the economy is rebounding strongly as Australians return to work and begin to move more freely across the nation. Noting an improvement from the Federal Budget forecasts, the Treasurer revealed Australia’s budget deficit is now on track to be $197.7 billion and $66 billion in 2023-24. Mr Frydenberg said unemployment is expected to return to pre-COVID levels within four years, noting this is faster than during the recessions of the 1980s and 1990s. Real GDP growth of 4.5 per cent is forecast for 2021, compared to a reduction of 2.5 per cent in 2020.
The Treasurer said the forecasts include the impacts of slower population growth; a fall in assumed commodity prices; and the expectation of the roll out of a vaccine by the end of 2021, and noted downside risks to these predictions such as the effectiveness of a vaccine, trade tensions and economic uncertainty all present risks to the budget bottom line. Today’s update also includes approximately $1 billion in funding for aged care, including 10,000 new aged care home packages, with the Treasurer flagging further spending on aged care following the release of the Royal Commission report in February.
Key economic indicators
- Real GDP is forecast to grow 4.5 per cent in 2021 following a fall of 2.5 per cent in 2021.
- Unemployment is forecast to peak at 7.5 per cent in March 2021 and will fall to 5.25 per cent by 2023-24.
- Australia’s budget deficit is forecast to be $213.7 billion for 2021-21, with deficits across the four-year forward estimates forecast to total $480.5 billion.
- The underlying cash balance is expected to be a deficit of $197.7 billion or 9.9 per cent of GDP in 2020-21. This is expected to improve over the forward estimates to a projected deficit of $66 billion or 3 per cent of GDP in 2023-24.
- Net debt is projected to reach $951.7 billion by mid-June 2024.