NZ Economy: Still on the right track – ANZ

By FXStreet FXStreet (Delhi) – Mark Smith, Senior Economist at ANZ, notes that the NZ treasury is forecasting a respectable economic outlook, with growth averaging 2.7% over the forecast horizon.

Key Quotes

• “Growth is forecast to accelerate as monetary conditions and the projected recovery in the terms of trade take hold. Nevertheless, the level of nominal GDP is projected to be $17bn lower by 2020 compared to the Budget.

• Much of the differences relative to the Budget was on the revenue side, where low inflation, the softer terms of trade and general economic backdrop contributed to a lower than previously forecast tax take.

• Overall, spending growth is expected to remain capped, and core Crown expenditure is expected to ease from 30.1% of GDP in 2014/15 to 29.1% of GDP by 2019/20. Importantly, new operating allowances were still projected at $2.5bn for 2017 Budget to be potentially used for tax cuts.

• Despite a better starting point, the weaker fiscal outlook also affects the expected timing of debt reduction. Net core Crown debt is now projected to peak at 27.7% of GDP in 2016/17 (26.3% in 2014/15 in Budget 2015) before easing to 24% of GDP by 2020 (16.9%). Net debt is not forecast …read more

Source:: FX Street