Aussie economy not so hot

Aussie revenue short by $17 billion

Australia’s budget woes deepened Tuesday, with the government downgrading revenue forecasts by a further 5 billion Australian dollars ($5.1 billion) as the nation’s mining boom comes off the boil.

Japan Times,

8 May, 2013

Finance Minister Penny Wong said government income was now expected to be AU$17 billion less than originally expected due to the strength of the Australian dollar despite softer commodity prices.

“The Treasury and the government are facing the challenge of a situation which has not really happened before, and that is the dollar staying stubbornly high despite what we call the terms of trade — that is, the prices of the things we sell to the rest of the world — coming off,” Wong said. “That rather unusual set of circumstances is driving this very large shift in profits, the downward shift in profits. So firms are earning less profits and therefore a reduction in revenues to government.”

It is the second substantial increase in estimated writedowns unveiled by the center-left Labor government in as many weeks, with Prime Minister Julia Gillard on April 29 upgrading the shortfall from AU$7.5 billion to AU$12 billion

Australia central bank cuts interest rate by 0.25 percentage point to record low 2.75 percent

Australia's central bank cut its key interest rate by a quarter percentage point to a record low 2.75 percent Tuesday in an effort to boost economic growth as a mining boom cools and the strong Australian dollar erodes business profits.

7 May

Reserve Bank of Australia governor Glenn Stevens said in a statement following the bank's monthly board meeting that economic growth was below trend in the second half of 2012 and continued to be that way in 2013. Australia's long-term trend growth rate is around 3.25 percent a year.

"Employment has continued to grow but more slowly than the labor force, so that the rate of unemployment has increased a little, though it remains relatively low," he said.

"The global economy is likely to record growth a little below trend this year, before picking up next year," he said.

Australia's jobless rate rose from 5.4 percent in February to 5.6 percent in March - the highest rate in more than three years.....

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