The Treasury and Finance departments announced on Monday that the country's Pre-election Economic and Fiscal Outlook (PEFO) has slightly veered away from their budget forecasts as both clarified that Australia's economic projections remained essentially untouched from the updates earlier released by Treasurer Wayne Swan.

The departments said that the country's budget surplus now stands at $3.5 billion for 2012/13 as compared to the $3.1 billion previously released by Mr Swan while the 2010/11 budget deficit is forecasted at $40.7 billion as against the earlier $40.4 billion announced.

The PEFO report also said that budget deficit for 2011/12 has been revised to $10.4 billion from the $10.0 billion previously published but the report remained firm on both departments earlier projections of 3.0 percent economic growth for the country, which is set to reach 3.75 by the onset of 2011/12.

The departments cautioned though that significant downside risks are still threats to global economic stability, specifying that "European sovereign debt crisis, uncertainty over whether the US recovery will gain traction, the challenge in China addressing overheating and the difficulty across the advanced economies in managing fiscal consolidation in a fragile global environment."

However, the report maintained that the lingering uncertainty would not prevent solid expansion in the Asian region which should further encourage strong demand and encouraging prices for the country's non-rural commodities.

The report added that employment should sustain its strong growth and the jobless rate should further plunge by 4.75 percent in the latter part of 2011/12, which should be the upside risks of the inflation forecast of 2.75 percent in 2011 and 2012 as the labour market should achieve full capacity over the next year.

The departments said that such developments would be followed by increasing demands that could eventually stretch the economy's supply capacity though stronger incomes are expected to prevail as boosted by a much improved terms of trade, which is projected to peak to a high of 17 percent in 2010/11, en route to much higher record levels afterwards.

The PEFO report is estimating a net government debt of up to $80.6 billion, which is about 5.7 percent of the country's gross domestic product (GDP) and still broadly aligned with the forecasts contained in the May budget and the Economic Statement published by the Treasury.