Slower growth ahead for Australia as population ages

AUSTRALIA’S economy is projected to grow more slowly over the next 40 years as an ageing population and slower population growth shrink the workforce, according to long-range economic forecasts set to be published by the government on Thursday (Aug 24).

Real gross domestic product (GDP) is forecast to grow 2.2 per cent annually over the 40 years to fiscal 2063, a full 0.9 percentage point slower than the previous four decades, according to excerpts of the “Intergenerational Report 2023” seen by Reuters before its release on Thursday.

The economy is expected to be around 2.5 times larger in real terms 40 years hence.

“Our economy continues to grow but our future prosperity depends on our ability to revitalise productivity growth, deliver high quality essential services and ensure we have a sustainable budget position,” Treasurer Jim Chalmers said.

The report, part of a series which periodically examines how trends in demography or technology will affect Australia’s economy, will also flag a changing tax base.

Fuel and tobacco excise taxes are expected to fall as people quit smoking and switch to electric cars, while taxes on companies and goods and services will track the growth slowdown.

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Income taxes will increase as a share of the economy, and total tax receipts are expected to hit 24.4 per cent of GDP in fiscal 2034. REUTERS