Bulletin: Australia's Fiscal Pain To Linger As Economic Recovery Begins

MELBOURNE (S&P Global Ratings) Oct. 6, 2020--S&P Global Ratings today said that Australia's economic recovery is underway now that domestic COVID-19 restrictions are being eased. It will take years for a substantial fiscal recovery, however. We forecast GDP growth of 0.7% in September quarter of this year, ending Australia's first recession in almost 30 years. However, we believe it will take another 18 months for the economy to return to its pre-COVID-19 level because of the 7% contraction in the June 2020 quarter. Today's 2020-21 Budget confirms that the COVID-19 pandemic and stimulus packages will weigh on fiscal outcomes for years to come. Unsurprisingly, fiscal 2021 will take the brunt of the hit. While most stimulus packages are temporary and

...October 6, 2020 MELBOURNE (S&P Global Ratings) Oct. 6, 2020--S&P Global Ratings today said that Australia's economic recovery is underway now that domestic COVID-19 restrictions are being eased. It will take years for a substantial fiscal recovery, however. We forecast GDP growth of 0.7% in September quarter of this year, ending Australia's first recession in almost 30 years. However, we believe it will take another 18 months for the economy to return to its pre-COVID-19 level because of the 7% contraction in the June 2020 quarter. Today's 2020-21 Budget confirms that the COVID-19 pandemic and stimulus packages will weigh on fiscal outcomes for years to come. Unsurprisingly, fiscal 2021 will take the brunt of the hit. While most stimulus packages are temporary and targeted, taxation revenues and social welfare payments will take years to recover and debt stocks will remain elevated for years. Nevertheless, our expectations are for fiscal deficits to narrow from fiscal 2022, even with the...

Bulletin