The Australian Government today released the 2020-21 Mid-Year Economic and Fiscal Outlook (MYEFO), which shows a $15.9 billion improvement to the Australian Budget’s bottom line as a result of a faster-than-expected rebound in the economy.
The underlying cash balance in 2020-21 is now expected to be a deficit of $197.7 billion, equivalent to 9.9 per cent of GDP. This is expected to improve over the forward estimates to a deficit of $66.0 billion in 2023-24 and to further improve over the medium term to a projected deficit of $45.7 billion or 1.4 per cent of GDP in 2030-31.
On a calendar‑year basis, real GDP is forecast to grow by 4½ per cent in 2021 following a fall of 2½ per cent in 2020. This compares with 4¼ per cent in 2021 and a fall of 3¾ per cent in 2020 at Budget.
The unemployment rate is forecast to peak at 7½ per cent in the March quarter 2021 down from an expected peak of 8 per cent forecast in the 2020-21 Budget. The labour market continues to strengthen alongside the recovery in economic activity, with around 85 per cent of the 1.3 million people who lost their job or were stood down on zero hours in April now back at work.
The 2020-21 MYEFO also includes $6.3 billion in new policy measures in response to the COVID-19 pandemic, bringing the Government’s direct economic and health support announced this year to $267 billion.
Policy measures announced in the MYEFO include:
- $3.2 billion to extend the temporary Coronavirus Supplement and other income support measures
- $1.6 billion to secure access to COVID-19 vaccines and roll out a national Vaccination Program, as well as $500 million to extend vaccine support to our region
- $1.0 billion in new funding for aged care, including releasing an additional 10,000 home care packages
- $683 million for new and amended Pharmaceutical Benefits Scheme listings
- $506 million in new infrastructure investment commitments
- $241 million to extend the HomeBuilder program
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