New Zealand Government Forecasts Stronger Economy, Smaller Deficits

WELLINGTON, Sept 29 (Bernama-Xinhua) -- New Zealand's economy is projected to strengthen while the government's fiscal position improves, Finance Minister Nicola Willis said on Tuesday, citing the Treasury's pre-election economic and fiscal update, reported Xinhua.

Willis said in a statement that the deficit in the year ending in July was NZ$3.4 billion (about US$1.9 billion) smaller than forecast in the May budget, reflecting stronger economic momentum.

Treasury forecasts show the operating balance deficit shrinking from NZ$11.4 billion forecast in the budget to NZ$6.8 billion this financial year and to less than NZ$1 billion next year. The surplus is then forecast to grow from NZ$4 billion to almost NZ$12 billion over the following three years.

The economy is forecast to grow at an average annual rate of 2.6 per cent, with 220,000 more jobs expected to be created and wages rising faster than prices, according to Willis.

Debt is forecast to start declining as a share of the economy in 2028/29 and fall in dollar terms in 2030/31, marking the first such decline since 2017/18, she said.

The improved outlook means the government is expected to borrow NZ$15 billion less over the next four years through reduced bond issuance, on top of a NZ$6 billion reduction in forecast borrowing in the budget, the minister said.

She noted that the outlook still faces risks from ongoing instability in the Middle East and urged the government to maintain fiscal discipline. 

--BERNAMA-XINHUA