NZ Budget 2016: Budget paints a strong picture for NZ economy
The country’s economy is in a strong position, according to the latest figures and forecasts released in today’s Budget,
with unemployment dropping, wage forecasts rising and strong export figures.
Real GDP growth is now forecast at an average and stable 2.8% over the next four years, inflation remains subdued, and
with low interest rates New Zealand is well positioned. Despite current weak dairy prices, exports grew by some $2
billion in the last year, reflecting a broadening of the country’s exporting base.
“The economy is clearly in a good place, but we are already seeing the strain that growth is putting on our
infrastructure,” said PwC Partner Richard Forgan.
Unfortunately, the good economic news doesn’t translate fully to the fiscal result, as low inflation continues to subdue
tax revenues. The Minister of Finance has therefore had rather fewer choices than he otherwise might have hoped,
particularly in the lead-up to the Election next year.
On the other hand, the Government’s finances remain strong, and net debt is expected to peak next year at 25.6% of GDP,
before dropping over the following years to reach 19.3% in 2020/21. Overall, this is a position that most developed
countries would envy.
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