New Zealand will avoid a double-dip recession but faces larger budget deficits and a longer road back to surplus, according to the nation’s Treasury Department.
Releasing the Pre-election Economic and Fiscal Update Tuesday in Wellington, Treasury said the deficit will widen to NZ$11.4 billion in the year ending June 2024 compared with a NZ$7.6 billion gap forecast in May’s budget. The books don’t show a surplus until 2027, a year later than previously projected.
“The economy is turning a corner, but the challenges remain very real,” he said. “This cannot be an election campaign where people are making big promises.” Robertson said his plan, which includes trimming baseline spending, reviewing the use of consultants and reducing future budget allowances, will see net government debt peak at 22.8% of gross domestic product in 2025 and fall to 21% two years later.While S&P Global Ratings last week affirmed New Zealand’s AA+ foreign currency credit rating, the weakness in the government books provides a target for opposition parties as they attack Labour’s economic stewardship ahead of the election.