New Zealand government raises fiscal surplus forecasts on the back of solid economic growth backdrop (despite dairy and other challenges) as well as spending restraint (core Crown expenses fall below 30% of GDP).
Budget forecasts released for 2016/17 showed that the government expects to post a NZ$668 million surplus in the year to June 2016, after a prior forecast of NZ$401 million deficit in December. Forecasts is for NZ$719 million surplus in the year to June 2017 (vs. prior forecast of a NZ$356 million surplus. Meanwhile, forecasts 2017-18 is for a budget surplus of NZ$2.46b.
Research Team at TDS, notes that the New Zealand’s 2016/17 budget contained no surprises, with a solid economy and fiscal restraint generating budget surpluses now and in the future.
New Zealand also expects GDP growth of 2.9% in 2016, 3.3% in 2017. As per inflation, forecast is for 2% in 2017. New Zealand also expects to reduce the unemployment rate to below 5% in 2018.
“Even if there are future tax cuts and Treasury’s optimistic growth assumptions are shaved down, neither dent what is clearly a strong government balance sheet. New Zealand’s debt and deficit metrics are clearly NZGB and NZD–supportive in our view.” adds TDS
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