(Bloomberg) -- Australia’s revenue upgrades to the budget will be just a fraction of those in previous updates due to weakness in the global economy, a softening labor market and lower commodity prices. 

Tax receipt upgrades excluding GST are expected to be around A$25 billion ($16.5 billion) over forward estimates in the May budget, the Treasurer’s office said in a statement on Sunday. That’s significantly below the A$129 billion average upgrade in the last three budgets, and much less than what many independent forecasters expect, according to the office. 

The smaller revenue bump underscores the challenges that remain for Australia’s slowing economy. Since winning office in May 2022, the center-left Labor government has run a tight fiscal policy to try to help the central bank bring down inflation, sparking a cost-of-living squeeze for Australians. Higher commodity prices and a tight labor market had helped drive a budget surplus in the fiscal year ending June 2023. 

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“We are realistic about the challenges facing our economy and our budget,” Treasurer Jim Chalmers said. “This includes not expecting the same sorts of massive revenue upgrades that we’ve seen in recent budget updates to continue.” 

The government is expected to bank almost all the revenue upgrade this fiscal year in the budget to help take the pressure off the immediate inflation challenge, his office said. 

--With assistance from Stanley James.

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