(Bloomberg) -- Australian businesses will boost investment at the fastest pace in a decade as the economy shakes off the impact of new and old variants of the coronavirus, Treasurer Josh Frydenberg said.
Business investment will grow 16% over the two years to June 30, 2022, the most since the end of the mining boom, Frydenberg said in an interview broadcast by the Australian Broadcasting Corp. Non-mining investment is expected to lead the way, he added.
“Non-mining investment will reach its highest level on record at more than A$200 billion ($143 billion),” Frydenberg said. “This is a sign of growing confidence in our economy by businesses big and small and by households, who are going out and spending.”
The accelerating economic rebound will improve the government's bottom line, cutting more than A$8 billion from the expected budget deficit for the fiscal year ending June 30, 2022, Frydenberg told the Australian earlier.
The central bank on Tuesday predicted a return to the strong growth trajectory seen before recent lockdowns, even as it expressed caution about the potential impact of the omicron variant and held interest rates at a record low. Australia's economy shrank 1.9% last quarter from a year earlier, beating an expected 2.7% drop as trade and fiscal stimulus helped cushion a slump in household spending.
The government is due to announce on Thursday an update to the 2021-22 budget that it released in May, which had forecast the deficit would narrow to A$106.6 billion, or 5% of gross domestic product, from A$161 billion in the prior fiscal year.
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Frydenberg also said that the initial signs from omicron aren't as concerning as for previous variants.
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