Australia set for 2nd budget surplus, says treasurer

Australia is set to record a second budget surplus in the “mid-teens,” according to Treasurer Jim Chalmers, who shared insights during an interview with Sky News on Sunday.

Official figures will be released in September, and Chalmers noted, “We already know enough about it to expect that Labour’s second surplus will be somewhere around the mid-teens. That could be the biggest back-to-back surplus on record.”

A budget surplus is typically seen as a significant achievement for the Australian government, reflecting effective fiscal management, although it may be influenced by external factors such as rising commodity prices. However, forecasts suggest a return to deficit in the coming years due to structural shortfalls and economic slowdowns.

Chalmers emphasised that “the governor of the Reserve Bank has said those two surpluses are really important. They’re helping put downward pressure on inflation.”

As for interest rates, the Reserve Bank of Australia (RBA) is scheduled to meet on August 5–6, with market expectations indicating a 65 per cent chance of a hike to 4.6 per cent this year.

A Bloomberg survey conducted from June 28 to July 1 revealed that most economists anticipate the RBA will maintain the current cash rate. Chalmers remarked, “The Americans are a little bit ahead because they peaked higher and earlier. We’ve all got some version of these inflation challenges.”

Attribution: Bloomberg