CANBERRA, Australia (AP) -- Australia's Treasurer said his government remains committed to returning the national budget to surplus next fiscal year despite the task becoming more difficult with slower than expected economic growth.
The economy grew by 0.4 percent in the three months through December and 2.3 percent over the year, according to official government statistics released on Wednesday. An Australian Associated Press survey of 17 economists found that the economy had been expected to expand by 0.7 percent during the December quarter.
Treasurer Wayne Swan blamed global market instability late last year for the disappointing figure after growth in the September quarter of 0.8 percent.
He said the slowdown would require "significant savings" — spending cuts — in his budget for the next fiscal year which begins July 1. The budget will be made public on May. 8.
"In ordinary times, this would be seen as a soft number," Swan told reporters of December quarter growth. "But the last three months of last year were far from ordinary. This is quite a solid number in the circumstances."
The government has long promised to return the budget to surplus in the fiscal year beginning July 1, 2012, after sinking into debt through billions of dollars in stimulus spending since 2008 to counter the global financial crisis.
The Australian economy scraped through the crisis with only a single quarter of economic contraction thanks to Chinese demand for Australian raw materials such as iron ore and coal which has fueled a resource boom.
But the pace of growth has been slower than initially forecast and resulted in tax revenue falling short of government expectations.
In its latest budget forecast released in November 2011, the government predicted a narrow surplus of 1.5 billion ($1.6 billion) in the next fiscal year — AU$2 billion less than forecast in May 2011.
Some economists have argued that an early return to surplus was not worth the risk of dampening growth through spending cuts.
But Swan said Australia needed to differentiate itself from Europe which is grappling with a sovereign debt crisis.
"What we've got to get right is our plans for the future, and that includes returning the budget to surplus in 2012-13 because recent events in Europe have underscored the importance of maintaining a credible fiscal policy," Swan said. "Maintaining our commitment to surplus sends a message of confidence to the world."