Treasury expected to cut forecasts

HAMISH RUTHERFORD
Last updated 05:00 17/12/2012

Relevant offers

Politics

Campaign 2014 is littered with landmines A long week in politics John Key: 'Ask me anything' Mark could get NZ First across line Greens wary of foreign-owned 'wall of wood' PM offers phone records PPTA reaches interim agreement Today in politics: Saturday, August 23 Conservatives goes to court over airtime More cash dished out for MPs' housing expenses

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

- Fairfax Media

Special offers
Opinion poll

Is it time for Judith Collins to go?

Yes

No

Undecided

Vote Result

Related story: Judith Collins looking isolated

Featured Promotions

Sponsored Content