14 May 2014
Australian budget to drag growth down - Nomura
FXStreet (Bali) - Charles St-Arnaud, Economist, and Martin Whetton, Rates Strategist, both working at Nomura, shared their take on the Australian government annual budget for 2014/15 released yesterday, noting that revenue increases and spending cuts will drag growth down in coming years.
Key Quotes
"Overall, we estimate that the new fiscal measures will mean that government spending will be a drag on nominal growth of about 1.2pp this fiscal year."
"The reduction in payment transfers to households, the new levy on high earners, increases in tariffs and the re-indexation amounts to a reduction in household disposable income, which will cause a drag on household spending and sentiment."
"With household spending needed to continue the rotation from the resource sector to the non-resource sector, we believe that today's Budget means that the RBA is highly unlikely to hike rates earlier than currently expected in Q1 2015. With the Budget being in line with expectations, the market reaction to it has been muted."
Key Quotes
"Overall, we estimate that the new fiscal measures will mean that government spending will be a drag on nominal growth of about 1.2pp this fiscal year."
"The reduction in payment transfers to households, the new levy on high earners, increases in tariffs and the re-indexation amounts to a reduction in household disposable income, which will cause a drag on household spending and sentiment."
"With household spending needed to continue the rotation from the resource sector to the non-resource sector, we believe that today's Budget means that the RBA is highly unlikely to hike rates earlier than currently expected in Q1 2015. With the Budget being in line with expectations, the market reaction to it has been muted."