Although the new estimate is less favourable, the deficit is nonetheless expected to contract compared with 2015 (from 2.6 to 2.4 per cent of GDP). Available data on the cash balance and revenues are compatible with the Government’s estimates for net borrowing.
A strong Asian recovery has also helped Australia. As in other developed countries, our consumers feel the effects of higher commodity prices as a reduction in real income. But since Australia is also a producer, the big rise in demand for energy, resources and food is expansionary for the economy.