Australia cuts forecasts for wage increases, economic growth and budget surplus

SYDNEY - Australia's mid-year budget update showed economic reality is starting to bear down on the government's finances.

Treasurer Josh Frydenberg also cut his forecasts for gross domestic product and wages growth this fiscal year, though dismissed concerns about the slowing economy and resisted calls for additional spending to support growth. If Frydenberg does manage to return the books to the black, it would be the first time since before the 2008 global financial crisis. By sticking to a traditional conservative government playbook of trying to pay down debt, he's flying in the face of a growing global chorus calling for looser fiscal policy, most recently with government stimulus programs announced in New Zealand and Japan.

James McIntyre, a Bloomberg economist, said:"The MYEFO confirms that Australia's lopsided economic policy mix remains in place, and that the RBA continues to bear the burden of returning the economy to potential. While the economic outlook underpinning the budget has been downgraded closer toward realistic outcomes, the outlook for the unemployment rate and wages growth continues to confound, and stands in contrast to the sober low wage reality laid bare by the RBA.

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