The economic surge caused by the end of China’s “zero COVID-19” restrictions cannot offset the impact to the Australian budget from the global economic downturn, Australian Treasurer Jim Chalmers said, just two days before he reveals his fiscal blueprint for this year.
Chalmers is tomorrow night expected to announce that Australia’s economy has returned to surplus for the first time in 15 years, benefiting from surging revenues from commodities exports and a persistently strong labor market.
Part of the budget windfall had been the Chinese economy picking up more quickly than expected over the past six months after the relaxation of COVID-19 restrictions, Chalmers said in an interview in Canberra yesterday.
China is Australia’s largest trading partner, with total trade more than twice as much as the next nearest country.
“But it’s offset by other things,” Chalmers told Bloomberg. “The global economy more broadly has been a bit softer than what people were anticipating.”
The IMF trimmed global growth projections in its latest outlook published last month, with world trade facing headwinds from stubbornly high inflation and rising borrowing costs.
The Reserve Bank of Australia unexpectedly hiked the cash rate to 3.85 percent on Tuesday, the highest level in more than a decade.
Despite difficult international conditions, Chalmers is tomorrow expected to reveal lower inflation and stronger wage forecasts than previously estimated, with unemployment peaking at 4.5 percent in the 2024-2025 financial year.
The treasurer yesterday said two-fifths of the dramatic turnaround in Australia’s revenue was driven by high wage growth and employment, while only 20 percent came from improvements in commodity prices.
However, budget deficits are expected to grow in the years ahead. Among revenue measures that would be detailed in the budget is a revamping of Australia’s petroleum resources rent tax, which is expected to raise A$2.4 billion (US$1.62 billion) over the coming years by capping generous deductions for the gas industry. The cap is to come into place on July 1.
Chalmers said the government had wanted to ensure a “fair return” for Australians with the tax changes, while keeping in mind its international supply obligations.
China and Japan voiced their concerns earlier this year that changes by Australia’s government to ensure domestic gas supply would hamper its ability to fulfill foreign contracts.
Australia has already imposed a price cap on domestic gas sales to soften energy expenditure for consumers in the wake of the Ukraine war, as well as raising costs on new gas exploration by legislating tougher action to contain carbon emissions.
“We want to make sure that this really important industry for Australia can continue to service its international obligations and its domestic obligations, that we continue to see investment in this sector,” Chalmers said.
Semiconductor business between Taiwan and the US is a “win-win” model for both sides given the high level of complementarity, the government said yesterday responding to tariff threats from US President Donald Trump. Home to the world’s largest contract chipmaker, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), Taiwan is a key link in the global technology supply chain for companies such as Apple Inc and Nvidia Corp. Trump said on Monday he plans to impose tariffs on imported chips, pharmaceuticals and steel in an effort to get the producers to make them in the US. “Taiwan and the US semiconductor and other technology industries
SMALL AND EFFICIENT: The Chinese AI app’s initial success has spurred worries in the US that its tech giants’ massive AI spending needs re-evaluation, a market strategist said Chinese artificial intelligence (AI) start-up DeepSeek’s (深度求索) eponymous AI assistant rocketed to the top of Apple Inc’s iPhone download charts, stirring doubts in Silicon Valley about the strength of the US’ technological dominance. The app’s underlying AI model is widely seen as competitive with OpenAI and Meta Platforms Inc’s latest. Its claim that it cost much less to train and develop triggered share moves across Asia’s supply chain. Chinese tech firms linked to DeepSeek, such as Iflytek Co (科大訊飛), surged yesterday, while chipmaking tool makers like Advantest Corp slumped on the potential threat to demand for Nvidia Corp’s AI accelerators. US stock
The US Federal Reserve is expected to announce a pause in rate cuts on Wednesday, as policymakers look to continue tackling inflation under close and vocal scrutiny from US President Donald Trump. The Fed cut its key lending rate by a full percentage point in the final four months of last year and indicated it would move more cautiously going forward amid an uptick in inflation away from its long-term target of 2 percent. “I think they will do nothing, and I think they should do nothing,” Federal Reserve Bank of St Louis former president Jim Bullard said. “I think the
SUBSIDIES: The nominee for commerce secretary indicated the Trump administration wants to put its stamp on the plan, but not unravel it entirely US President Donald Trump’s pick to lead the agency in charge of a US$52 billion semiconductor subsidy program declined to give it unqualified support, raising questions about the disbursement of funds to companies like Intel Corp and Taiwan Semiconductor Manufacturing Co (台積電). “I can’t say that I can honor something I haven’t read,” Howard Lutnick, Trump’s nominee for commerce secretary, said of the binding CHIPS and Science Act awards in a confirmation hearing on Wednesday. “To the extent monies have been disbursed, I would commit to rigorously enforcing documents that have been signed by those companies to make sure we get
RSS