AUD: Budget tiptoeing into an election and around rating agencies – Goldman Sachs

By FXStreet Research Team at Goldman Sachs, suggests that the 2016-17 Australian Commonwealth Budget is calibrated with an election in mind, yet it is a Budget with competing aims.

Key Quotes

“It is a Budget positioning to build stronger growth and employment, yet it is a Budget that seeks to do minimal repair to the nation’s finances and imparts a negative fiscal impulse on 0.5% pa on nominal economic growth on average over the next 4 years. It is a Budget that continues to suffer from the headwinds of weaker growth at home and abroad, yet does not seek to alter the same fiscal strategy attempted by successive governments. It is a Budget that once was held out as providing comprehensive taxation reform, yet has reverted to simplistic hikes in tobacco taxes, a minor lift in a personal income tax threshold and changes to superannuation for high income earners to fund taxation cuts for small business.

This may not sound like an election Budget, but it is Budget that is tightly calibrated to avoid a downgrade in Australia’s AAA credit rating. On the numbers presented in this Budget it may well avoid a warning from rating agencies being issued in the near term; however, on …read more

Source:: FX Street