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Half Year Figures Show NZ Economy On Track

by Mary Swire,, Hong Kong

27 December 2012

The New Zealand government is forecasting a "modest" surplus in 2014/15, although figures for the latest quarter of the the current financial year show what Finance Minister Bill English says is "a slightly softer performance."

The Half-Year Economic and Fiscal Update forecasts a surplus of NZD66m (USD54.3m) in 2014/15, down on previously released figures in Budget 2012, which predicted a surplus of NZD197m. Thereafter, surpluses are projected to increase, and, after net core debt peaks at below 30% in 2014/15, it will begin to fall. Economic growth will average 2.5% over each of the next five years.

English said of the Update, “Continued control over spending has allowed the government to remain on track to surplus, despite the impact on revenue of more difficult global conditions.” English added that, when compared with other countries, the New Zealand economy appears in "good shape." “Despite our growth forecasts being slightly weaker than in Budget 2012, New Zealand is expected to grow more strongly over the next four years than the Euro area, the United Kingdom, Japan and Canada," he noted.

However, revised figures released by Statistics New Zealand illustrate that growth eased in the three months to end-September. Gross domestic product grew 0.2% over the quarter. This takes annual growth for the period from the September quarter 2011 to the September quarter 2012 down to 2%.

Reacting to the revised figures, English said that quarterly movements must not prove a distraction, stressing that "what's important is that the economy is on track for 2%-plus growth over the next few years." The government has four main priorities for the remainder of its term, which include a return to surplus and a reduction of debt. It will also push ahead with a program of macroeconomic reforms and seek better results from public services, while continuing with the rebuilding of earthquake-hit city Christchurch.

Hinting at the forthcoming Budget 2013, English said it will focus on continuing to implement this plan. “Budget 2013 will confirm the government’s commitment to responsible long-term fiscal management. This will require restraint well beyond the surplus target of 2014/15, so we can pay down debt and build a buffer against the next global shock, while at the same time resuming payments to the New Zealand Superannuation Fund and targeting investment at priority public services."

TAGS: Finance | tax | fiscal policy | gross domestic product (GDP) | budget | United Kingdom | ministry of finance | Canada | New Zealand | revenue statistics | Japan

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