Should I care about this week’s mid-year economic and fiscal outlook?

Should I care about this week's mid-year economic and fiscal outlook?

The mid-year economic and fiscal outlook (MYEFO) is scheduled to take place tomorrow. Here's why you might want to tune in.

Gretchen Kennedy

Gretchen grew up in a small Connecticut town where she learned to read The Wall Street Journal as part of the grade six enrichment program. She moved to Australia in 2002, earned a Master of Arts (Professional Writing) and went on to spend eight years writing on Wall Street. In June 2018, Gretchen returned to Australia and has since developed a keen interest in all things ASX. In December 2020, she started writing for the Motley Fool. Gretchen's usually writing something, reading a book or chasing her dogs around.

Published December 16, 2020 2:49 pm AEDT

Following October's budget announcement, the mid-year economic and fiscal outlook (MYEFO) is scheduled to take place this Thursday (17 December 2020).

The outlook will be delivered by Treasurer Josh Frydenberg. During his commentary, Mr Frydenberg will discuss what the economy has done since October, the current state of affairs, and what parliament predicts to be on the horizon.

Considering the way that economies worldwide continue to navigate the global coronavirus pandemic, this year's MYEFO discussions might be more interesting to listen to than last year's were.

AGL capital raise demerger asx growth shares represented by question mark made out of cash notes — Image source: Getty Images

So what's been going on?

As the MYEFO approaches, the Australian Financial Review (AFR) reports economists are widely expecting an improvement of $14 billion or more in the budget's bottom line.

Their speculation is commonly based off of recent gains in the price of iron ore, which significantly exceeded Treasury's previous estimates. This is a particularly welcomed benefit to receive, considering the current trade war with China.

Following the spike in unemployment experienced earlier this year, positive job data was released by the Australian Bureau of Statistics on 15 December. The slight increase in the payroll jobs number supports other recently published, positive economic indicators like an increase in consumer confidence. These combined factors often lead to an economy on the up. Mr Frydenberg's insights tomorrow should help connect the dots.

Finance or philosophy?

While economic analysis and predictions add colour to underlying business environments, everyone's takeaways are bound to vary. From a share market perspective, volatility can be expected regardless of government statements or statistics.

That said, if you're someone interested in big-picture perspectives, you might enjoy hearing about what comes out of the MYEFO tomorrow.

Tuning in to Mr Frydenberg's comments will shed light on how Australia continues to manage China's backlash and steer through the pandemic. It will provide updated economic forecasts and share the government's insight on what recovery looks like moving forward.

If this makes your ears perk up, tune in! If not, rely on your reporter friends to disperse the best bits.

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