As Australia grapples with a slowing resources sector exacerbated by plummeting commodity prices, analysts say the Australian budget due Tuesday will be about propping up sub-par economic growth rather than the traditional fiscal discipline.
Falling commodity prices and slowing income growth are expected to strip off 21 billion ($16.6 billion) Australian dollars from revenues, according to a May 6 Goldman Sachs report.
Iron ore is such a central part of the Australian government’s revenue that “the key revision to economic parameters is likely to be a downward revision to iron ore prices and the terms of trade,” ANZ said in its May 4 budget preview report.
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