Treasurer Josh Frydenberg has talked up Australia’s economic outlook in his mid-year economic update but the spectre of COVID-19 continues to hang over the predictions.
Treasury’s mid-year economic and fiscal outlook suggests the economy is rebounding strongly from the impact of lockdowns from the Delta variant.Lower unemployment and higher wages are being spruiked by the government, but there is also increasing inflation to match it.
But the short term reality is that an expected increase in inflation is expected to eat into these gains. "A trillion dollars of government debt is a very big number and we’ve got to start somewhere to contain that - let alone start to reduce it."The budget update outlines that underlying resilience in the economy is expected to continue even as new COVID-19 variants emerge.
Treasury's modelling does accept that a "temporary strengthening of activity restrictions" may be required to respond to rising case numbers or contain a "localised outbreak" in areas of lower vaccination coverage.
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