Returning Australia’s budget to surplus is the best defense against an uncertain global economic outlook and will continue to support the nation’s top credit ratings, Treasurer Wayne Swan said.
Australia’s economy is forecast to return to its trend growth over the next couple of years with a strong outlook for mining investment, Swan said in his weekly economic note today.
“Against the uncertain international backdrop, Australia’s fiscal discipline sends a strong message of confidence to the world, demonstrated in our AAA credit rating from all three major international ratings agencies, something never before achieved in our nation’s history,” Swan said.
Prime Minister Julia Gillard is set to unveil on May 8 a budget that seeks to end four years of deficits as support for her government has fallen to near-record lows in opinion polls. The budget comes as the Reserve Bank of Australia cut growth and inflation forecasts this week on slowing inflation after slashing its key rate by half a percentage point to a two-year low.
Australia escaped recession during the global financial crisis and is still doing “far better” than most other economies, Finance Minister Penny Wong said today. Mining investment in Australia, the world’s biggest exporter of iron ore and coal, is estimated to reach A$120 billion ($122 billion) in the next fiscal year, an increase of around 155 percent in two years, Swan said in March. The nation is rated Aaa by Moody’s Investors Service and AAA by Fitch Ratings, both with stable outlooks.
Gillard said today returning the budget to surplus will create “a buffer” if the global economy worsens.