Population growth slowed dramatically with the closure of international borders after the outbreak of the pandemic in February/March 2020, falling to almost zero in net terms in 2021/2022.
With borders reopening and the government encouraging migrants to return, in part to help ease the current labor and skills crisis, migration is expected to resume its pre-pandemic trend this fiscal year (se ending June 30, 2023), two years earlier than planned in the March 2022 budget.
Net migration is expected to reach 200,000 in 2022/23 and remain at this level in 2023/24 and 2024/25.
The ABC’s chief economist, Stephen Halmarick, in his post-October budget review, released today (October 26, 2022), said population growth is a key assumption in the Treasury’s fiscal estimates.
“Falling population growth is an economic headwind because it reduces aggregate demand, labor supply and tax revenue,” Halmarick said. “However, this does not have much impact on the per capita results.”
The ABC’s analysis of budget documents shows that population growth is expected to increase by 1.4% over the next two fiscal years, which will boost the government’s gross domestic product (GDP) and employment forecasts.
An increase in population growth and its impact on GDP will provide a welcome boost to real GDP, which is expected to grow by 3.25% in 2022/23 before falling back to 1.5% in 2023/24.
Mr Halmarick said the government’s forecast for real GDP looks “good” to ABC economists and is not too different from the team’s own estimates for GDP growth of 2.8% in 2022 /23 and 1.7% in 2023/24.
Read the full 2022/23 federal budget update.
For more information visit: commbank.com.au/federal-budget