Australia cuts growth forecast, says budget strong

Australia pared its economic growth forecast on Tuesday because of sluggish exports, as expected, but said rising tax receipts would boost the country's budget surplus. Treasurer Peter Costello, releasing the government's mid-year review of the 2004/05 budget, said the outlook for the economy in 2004/2005 was still strong despite moderating growth.
He said gross domestic product (GDP) in the year ending June 2005 was expected to expand 3.0 percent, down from a previous 3.5 percent forecast made in September. However, the underlying cash surplus for fiscal 2005 was revised higher to A$6.2 billion ($4.7 billion), or 0.6 percent of GDP, from September's forecast of A$5.3 billion.
"More money, less growth, as expected," said Michael Blythe, chief economist at the Commonwealth Bank of Australia.
"The damage seems to be mainly from downward revisions to exports ... the failure of our export volumes to respond to what has been the best global backdrop for a couple of decades."