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Budget 2009 Home Page Budget Economic and Fiscal Update 2009

Alternative Scenarios

Global conditions mean that the level of uncertainty associated with any forecast made in the current environment is significantly larger than normal. This reflects the extent to which the world economy is in the most significant and synchronised downturn since World War II. In addition, policy responses to the downturn are increasingly occurring outside the realm of past experience and therefore the effectiveness and potential side-effects associated with such policy responses are yet to be fully understood.

Two alternative scenarios are presented below that consider how the economy and therefore fiscal outcomes could differ from the main forecast in the event that trading partner growth turns out to be different from that assumed in the main forecast. While the scenarios below do not represent the most likely track for the economy, the probability of such outcomes occurring should not be ignored and as such the scenarios provide an integral part of the overall information provided in the Budget Forecasts.

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