Following a weaker‐than‐expected third quarter, economic growth for 2021 has been revised down to 4.8 per cent, compared with 5.1 per cent estimated at the time of the 2021 Medium Term Budget Policy Statement (MTBPS). The medium‐term growth outlook has improved moderately. Treasury projects real economic growth of 2.1 per cent in 2022, the year in which the economy is expected to return to pre‐pandemic production levels. GDP growth is expected to average 1.8 per cent over the next three years.
Significant risks to the economic outlook include new COVID‐19 variants leading to new waves of infection, continued interruptions in power supply, rising inflation and fiscal risks. Faster‐than‐expected global interest rate increases would also have negative consequences for the economy. The 2022 Budget Review supports the implementation of a wide range of reforms to bolster economic growth and employment over the medium and long term.
Global uncertainties and an uneven domestic recovery will weigh on the economic outlook over the medium term. While the outlook for 2022 has been revised upward, persistent structural constraints continue to inhibit the pace of the recovery from COVID‐19 and longer‐term growth. Accelerated implementation of reforms is necessary to create jobs and encourage investment over the medium term.