– The prospect of a cooling in the Chinese property market and a slowing in Chinese growth would suggest that Australian Governments should probably not assume that any lift in budget revenues on account of higher commodity prices is likely to be permanent.
– Indeed with wages growth in Australia (and globally for that matter) remaining weak there remains on-going risk to medium-term budget forecasts in our view. (That is, the source of ‘risk’ for nominal growth and hence budget revenues is likely to have shifted from the terms of trade to weakness in wages growth and limited domestic price pressures.)
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David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
