Australia Lowers Budget Surplus, Growth Targets

123jump.com Staff
05 Nov, 2008
New York City

Australia lowered its budget surplus, economic growth and tax receipts collection targets for the next three fiscal years. Global economic slowdown is expected to lift unemployment and slow down household expenditures. September housing permits approval dropped 7.2% from August.

[R]3:00 a.m. New York, 7:00 p.m. Sydney – Australia lowered its budget surplus, economic growth and tax receipts collection targets for the next three fiscal years. Global economic slowdown is expected to lift unemployment and slow down household expenditures.[/R]

Stocks in Australia rose on optimism buoyed by the election victory of Democratic presidential Barack Obama. Oil and metal prices increased.

However gains were pared by a government report that showed tax receipts will plummet by A$40 billion on turbulence on the global financial markets.

In Sydney trading ASX 200 rose 3% or 121.5 to 4,336.60.

Of the ASX 200 index stocks 157 rose, 35 declined, and 8 were unchanged. MacMahon Holdings led advancers in the index shares with a rise of 25.8% followed by Mount Gibson Iron increasing 25.3%.

Australia Lowers GDP Growth, Budget Surplus

Treasurer Wayne Swan said in the mid-year economic and fiscal outlook from 2008-2009 that the country''s tax receipts are forecasted to be A$40 billion less that the initial estimates made in the May Budget.

Swan also lowered growth projection for the current fiscal year to 2% from 2.75% estimated in May. The unemployment rate is projected to rise to 5% in the quarter to June 2009 and 5.75% by the June quarter 2010.

The government''s underlying cash surplus is expected to drop to A$5.4 billion at the end March 2009 from A$21.7 billion forecasted in May.

In addition, tax receipts will decline to A$4.9 billion in 2008-09 to A$12.2 billion in 2009-10 and to A$12.4 billion in 2010-11 and A$7.9 billion in 2011-12 on reduced forecasts of capital gains tax collection. In all, in the three years tax receipts will declied by A$40 billion.

Australia has already budgeted A$10.4 billion in economic stimulus package to through one-time tax refunds to revive household spending.

Treasurer Swan estimated economic growth of 2.25% and A$3.6 billion budget surplus in fiscal 2009 and A$2.6 billion in fiscal 2011

Australian Surplus Rises to A$1.46 billion in September

The Australian Bureau of Statistics reported that the balance of goods and services in seasonally adjusted terms rose by A$220 million from August to A$1.46 billion in September.

Exports of goods and services rose 8% to A$26.5 billion, with non-rural goods increasing 10% to A$1.6 billion and other goods edged gained 3% to A$39 million.

Imports of goods and services advanced 7% to A$1.6 billion as intermediate and other merchandise goods soared 13% to A$1.1 billion.

Housing Units Approved Decline 7.2% in September

Separately the online edition noted that in seasonally adjusted terms total approved dwelling units fell by 7.2% in September after falling 3.4% the previous month.

Private sector houses approved dropped 4.7% in the review period, and other dwellings approved dipped 15.2% from 4.8% the previous month.

In seasonally adjusted terms the estimate for the value of total building approved fell 8.2% and the estimate for the value of new residential building approved declined 9.8% in September.

Gainers & Losers

MacMahon led advancers in the ASX 200 index shares with a rise of 25.8% followed by gains in Mount Gibson Iron of 25.3%, in Lynas Corp. of 25.3%, in Kingsgate Consolidated of 24.6%, and Transpacific Industries of 16.9%.

Paladin Energy rose after oil prices gained $7.59 to $71.5 per barrel. Gold prices also increased $30 to $757.3 per barrel. Equinox Mine gained 12% and Macarthur Coal soared to 11%.

Babcock & Brown led decliners in the ASX 200 index stocks with a fall of 25.5% followed by losses in Babcock & Brown of 8.3%, in Babcock & Brown of 7.8%, Sundance Resources of 7.4%, and HFA Holdings of 5.3%.

Company News

National Australia Bank has lowered its standard variable home loan rate by 62 basis points after the central bank reduced its key rate by 75 basis points yesterday.

NAB''s standard variable mortgage interest rate will drop from 8.4% to 7.7%.