The Morrison government's repeated claims of being superior economic managers will be put to the test next week when the latest growth figures are released. Economists expect the national accounts for the December quarter will show another sluggish expansion and a weak starting point for what could be a negative result in the March quarter as the impact of the coronavirus takes hold. Already Treasurer Josh Frydenberg's bragging last year of the budget being "back in the black" looks increasingly premature. The government's latest monthly financial statement for January showed the underlying cash balance at a $26.6 billion deficit, $3.73 billion larger than had been predicted after seven months of the 2019/20 financial year. At his mid-year budget review in December, Mr Frydenberg had predicted a $5 billion surplus, itself down from the $7.1 billion surplus forecast at the time of the April budget. Finance Minister Mathias Cormann was quick to play down the implications from the latest monthly figures. "As we consistently caution, monthly results are inevitably volatile due to timing differences between when receipts are received and when payments are made," Senator Cormann said in a statement. "The months of December and January over the years have consistently been two of the most volatile with the highest deviation from the indicative profile." He said the government is very conscious of the fact that the coronavirus, following on from the drought and bushfires, will have a negative impact on the economy and consequently is likely to have an impact on the budget. But Labor isn't having a bar of that excuse. "The surplus is the primary test that (Prime Minister Scott) Morrison and Frydenberg set for themselves and it will be humiliating for them if they fail," shadow treasurer Jim Chalmers told AAP. "The fires and coronavirus on their own don't excuse or explain their longstanding failures of economic management which have been obvious for a long time." Commonwealth Securities chief economist Craig James says a small budget deficit is very appropriate in Australia's current circumstances. "Greater, rather than less spending is called for given softness of the economy," he said. Economists at this stage expect Wednesday's national accounts will show the economy grew by a slim 0.4 per cent in the December quarter. While this will lift the annual rate to 2.0 per cent from 1.7 per cent, it would still leave growth well below its long term trend. Economists will finalise their forecasts after business, government spending and international trade figures early next week. "December quarter GDP is likely to show a renewed slowing," AMP Capital chief economist Shane Oliver said. "The bushfires and the coronavirus will likely take the economy backwards this (March) quarter with significant uncertainty around the duration of the hit from coronavirus." Australian Associated Press
A budget surplus may be under a cloud with data next week likely to show sluggish economic expansion
The Morrison government's repeated claims of being superior economic managers will be put to the test next week when the latest growth figures are released.
Economists expect the national accounts for the December quarter will show another sluggish expansion and a weak starting point for what could be a negative result in the March quarter as the impact of the coronavirus takes hold.
Already Treasurer Josh Frydenberg's bragging last year of the budget being "back in the black" looks increasingly premature.
The government's latest monthly financial statement for January showed the underlying cash balance at a $26.6 billion deficit, $3.73 billion larger than had been predicted after seven months of the 2019/20 financial year.
At his mid-year budget review in December, Mr Frydenberg had predicted a $5 billion surplus, itself down from the $7.1 billion surplus forecast at the time of the April budget.
Finance Minister Mathias Cormann was quick to play down the implications from the latest monthly figures.
"As we consistently caution, monthly results are inevitably volatile due to timing differences between when receipts are received and when payments are made," Senator Cormann said in a statement.
"The months of December and January over the years have consistently been two of the most volatile with the highest deviation from the indicative profile."
He said the government is very conscious of the fact that the coronavirus, following on from the drought and bushfires, will have a negative impact on the economy and consequently is likely to have an impact on the budget.
But Labor isn't having a bar of that excuse.
"The surplus is the primary test that (Prime Minister Scott) Morrison and Frydenberg set for themselves and it will be humiliating for them if they fail," shadow treasurer Jim Chalmers told AAP.
"The fires and coronavirus on their own don't excuse or explain their longstanding failures of economic management which have been obvious for a long time."
Commonwealth Securities chief economist Craig James says a small budget deficit is very appropriate in Australia's current circumstances.
"Greater, rather than less spending is called for given softness of the economy," he said.
Economists at this stage expect Wednesday's national accounts will show the economy grew by a slim 0.4 per cent in the December quarter.
While this will lift the annual rate to 2.0 per cent from 1.7 per cent, it would still leave growth well below its long term trend.
Economists will finalise their forecasts after business, government spending and international trade figures early next week.
"December quarter GDP is likely to show a renewed slowing," AMP Capital chief economist Shane Oliver said.
"The bushfires and the coronavirus will likely take the economy backwards this (March) quarter with significant uncertainty around the duration of the hit from coronavirus."
