gloomy world outlook to hit budget: swan

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    If growth slows won't inflation fall?


    April 13, 2008
    A GLOOMY global financial outlook threatens to rain on Treasurer Wayne Swan's parade when he delivers his first Federal Budget next month.

    After attending spring meetings of the International Monetary Fund (IMF) in Washington and meeting with US Federal Reserve chairman Ben Bernanke, Mr Swan said world financial turmoil would have a significant impact on his inaugural Budget.

    "Well, certainly Australia is better placed than most developed countries to handle the fallout of what's happening in the world economy," he told ABC Television.

    "But ... we've had slowing world growth, higher inflation in the developing world, and international financial market turmoil, which is attacking business confidence around the world.

    "That's going to produce slower growth - if that flows onto China and India, that does have significant implications for the Australian economy and for our budget."

    Mr Swan said his number one budget priority was tackling inflation.

    "We've got a delicate balance as we frame this budget," he said.

    "We have to tackle inflation but we have to modernise our economy, particularly to safeguard the country from the international fallout of what has been obvious here at the IMF."

    The International Monetary and Financial Committee has released a statement indicating since its last meeting six months ago, global financial instability had increased, economic growth had slowed and growth prospects for 2008 and 2009 had deteriorated.
 
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