Treasury expected to cut forecasts

Last updated 05:00 17/12/2012

Relevant offers


Brendon McCullum called Prime Minister by Indian announcer during John Key visit PM Key tells off Max over 'real men ride women' blurt Motorcades and high level security are the perks of travelling with the PM: Brendon McCullum US Secretary of State tipped for NZ visit Methamphetamine contamination guidelines 'misused' to evict tenants Mental health workers clock up big hours PM Paula Bennett? What the Westie warrior could do while she's in the hot seat New Zealand's as close as it's ever got to a free trade deal with India - John Key Prime Minister John Key would have attended Helen Kelly's memorial service if he could John Key officially welcomed in New Delhi ahead of meeting with Indian counterpart

The Treasury is expected to cut its forecasts for economic growth this week, but maintains that New Zealand is still on track to reach surplus in three years.

Tomorrow sees the release of the Half Year Economic and Fiscal Update, a midyear budget update in which the Treasury outlines its expectations for the Government's finances.

Prime Minister John Key has said repeatedly that the Government would eliminate New Zealand's budget deficit by the 2014/15 financial year, when it will post a small surplus. Earlier this month Mr Key said he was "not uncomfortable" with the numbers he had seen ahead of the Treasury's update.

However, tomorrow's update is likely to paint a different picture to that of six months ago, which could spell signals of deeper cuts in government spending.

In May's Budget, Treasury said it expected the economy would grow at 2.5-3 per cent over the next few years, a rate which would meet Mr Key's surplus goal, but would be stronger than expected by most economists.

In September, the financial markets appeared to have dismissed the aim, due to signs that the economy was growing more slowly than expected.

A survey of economists undertaken by the New Zealand Institute of Economic Research, found an average expectation of a $1.1 billion deficit in 2014/15.

The Government's insistence that the surplus target can be reached appears to have won over some economists.

"The prime minister's come out saying he thinks it's still achievable. We'll take him at his word," ANZ chief economist Cameron Bagrie said. But he said he expected the Treasury would trim back how much the economy would grow in the next few years.

Ad Feedback

- The Dominion Post

Special offers
Opinion poll

Where do you stand on political coat-tail riding?

If it gets marginalised voices into Parliament, I'm for it.

I'm against it - if you don't get the votes, you shouldn't be there.

It's just part of the political game.

Vote Result

Related story: Voters reject riding on the coat-tails

Featured Promotions

Sponsored Content