Drought forces Australia to cut growth forecast to 3.0 percent.

(From Agence France Presse)

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The Australian government slashed its 2002-2003 economic growth forecast by 0.75 percentage points to 3.0 percent due to severe drought but insisted the move would not hurt its budget surplus.

In a mid-year budget review, Treasurer Peter Costello said drought, weak international markets and increased defence spending after last month's Bali bombing had skewed budget forecasts delivered last May.

But he remained upbeat about the wider economy and left the budget's forecast cash surplus at 2.1 billion dollars (1.18 billion US), despite market expectations it would be halved …