Chalmers will tell parliament that economic growth in the 2021/22 fiscal year that ended on June 30 is expected at 3.75%, down from a forecast of 4.25% made by the previous government in March.

Growth forecasts for 2022/23 and 2023/24 have also been revised down by half a percentage point to 3% and 2%, respectively.

Chalmers is expected to update forecasts for inflation and other economic indicators in his ministerial statement and say what the changes will mean for the budget position the Labour government inherited after a May election victory.

“Forecasts are never perfect, but these better reflect the economic circumstances our new government is now dealing with, compared with what was set out before the election,” Chalmers will say, according to the speech notes.

“Inflation will unwind again, but not in an instant.”

Since Labour won office, Chalmers has been warning that the economy is facing significant challenges, including inflation, which hit a 21-year high in the June quarter and is expected to rise further.

Interest rates have been rapidly rising from record lows put in place during the COVID-19 pandemic, with the Reserve Bank of Australia expected to deliver a fourth rise in as many months at a meeting next week.