Treasury readies to slash global growth outlook as May budget looms after US talks

Treasurer Jim Chalmers will slash growth forecasts for some of the world’s biggest economies, deeming the outlook “fraught and fragile” after a string of meetings with his global counterparts in the US.

Australia’s financial controller held 19 meetings in less than 48 hours as part of a G20 gathering in Washington DC with finance ministers and central bank chiefs from all over the world earlier this week.

The whirlwind trip comes as the Labor Government readies to put the finishing touches on its May budget, amid calls for relief on extended cost of living pressures.

But concerns for the dreary global outlook — marred by fears of escalating tensions in the Middle East and the repercussions of a slump in China’s economy — have prompted Treasury to pull back the GDP growth outlook for most of the major economies it keeps track of in each budget.

“Events in the Middle East are casting a shadow over the global economy, compounding the concerns about lingering inflation and weaker growth,” Dr Chalmers said.

“The fraught and fragile global outlook was a big feature of the discussions in Washington DC and will be a big factor as we put the finishing touches on the budget.”

He said the upcoming budget would also come with an “emphasis on security”.

“Relieving cost of living pressures, repairing our budget and reforming our economy is the best antidote to the kinds of risks that we see escalating around the world,” he said.

Revised forecasts for the next three years have China’s economy growing at its weakest rate since the late 1970s.

Japan is also set to be revised down amid weaker than expected consumption.

India is tipped to maintain the largest growth rate over the next three years. The UK is pencilled in to stay relatively flat.