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Grim times to come, says Swan

Federal Treasurer Wayne Swan has warned of higher unemployment and slower growth than earlier forecast, due to the effects of the global economic slowdown.

南宁桑拿

Treasurer Wayne Swan released official forecasts in February predicting unemployment would rise to seven percent by mid-2010 and economic growth would slow to one percent this year.

But he said that OECD figures released this week projecting developed economies would experience a 4.3 percent contraction and unemployment of 10 percent this year cast new light on the depth of the crisis facing Australia.

“Certainly it does mean that growth will be slower in Australia than was forecast back in February,” Swan told ABC television late Wednesday.

“It certainly does mean that unemployment as a consequence will be higher, and I think it certainly does mean as a consequence that the hit to our bottom line in terms of budget revenue will be higher than was forecast in February.”

Australia\’s unemployment rate hit a four-year high of 5.2 percent in February, while the economy shrank for the first time in eight years in the final quarter of 2008.

Swan said Australia\’s official forecast would be updated in early May when the government hands down its annual budget.

He refused to speculate on whether the budget would add further economic stimulus to two packages already released worth a combined 52 billion dollars (36 billion US).

But the treasurer predicted a “tough” budget, given that estimates the financial crisis would cost Canberra 115 billion dollars in revenues over the next four years were also outdated.

“There will be tough choices in the budget … revenues have been downgraded to the tune of 115 billion and I think the downgrades would certainly be greater than that,” he said.

He also said Australia\’s plan was to run a temporary budget deficit for the duration of the crisis, then return to surplus over time.

“Everybody at the table recognises that over time that some discipline has to be restored, but that can only happen … when growth is restored and growth returns to trend,” he said.

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