AUSTRALIAN BUDGET: Australia sees 2025/26 budget deficit at AUD 28.3bln (vs AUD 36.8bln projected); sees 2026/27 budget deficit at AUD 31.5bln, 2027/28 deficit AUD 31.0bln; Treasurer says budget helps, rather than harms, the fight against inflation
CPI
- Sees CPI inflation at 5% in 2025/26, 2.5% through 2029/30
GDP
- Sees GDP growth at 2.25% in 2025/26, 1.75% 2026/27, 2.25% 2027/28
DEFENCE
- Australia to invest AUD 53bln in defence capabilities (as touted)
NET DEBT
- Sees net debt rising to 21.9% of GDP in 2029/30, gross debt to 35.6%
HOUSING
- Australia limits negative gearing to new homes
- Australia cuts tax breaks for landlords to help young people own a home
- Australia to scrap 50% capital gains tax discount
Context
Australia's updated budget forecasts a smaller deficit than previously projected, which may ease concerns about fiscal sustainability. The Treasurer's assertion that the budget supports the fight against inflation, alongside a moderate CPI outlook, implies a balanced approach to fiscal policy while prioritizing growth. This could influence market sentiment, particularly in fixed income and currency spaces, as it reflects a commitment to managing inflation without aggressive austerity measures.
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