WELLINGTON – New Zealand will return to budget surplus sooner than expected and will take on lesser debt as the economy has been more resilient than previously forecasted, the government said on Wednesday.
The treasury department forecasted that deficit will widen to NZ$20.8 billion ($14.01 billion) in the current year but the books will return to a surplus in 2023/24, about 2 years ahead of previous forecasts.
“The New Zealand economy has performed well since the beginning of 2021, though that strength has been tested by the arrival of Delta,” Finance Minister Grant Robertson said at a news conference.
Gross domestic product (GDP) is expected fall by approximately 6% in the September quarter, due the economic impact Delta outbreak. But it will gradually recover over the December and March 2022 quarters growing 3.7% and 3.8% respectively, according to the treasury’s half-year economic and fiscal update (HYEFU). The GDP will reach 4.9% by 2023/24.
Net debt will be higher at 37.6% of GDP in 2021/22 compared to 34.0% forecasted in May. The net debt peaks at 40.1% by 2022/23 before falling to 30.2% by the end of the forecast period.
New Zealand enforced some of the tightest pandemic restrictions and border curbs in the world, which limited the spread of COVID-19 and helped its economy bounce back faster than many other countries.
The South Pacific nation plans to open its borders gradually from January next year.
($1 = 1.4843 New Zealand dollars)
(Reporting by Praveen Menon)