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New Zealand government raises 2016/17 budget surplus forecast, cuts GDP projections
The New Zealand government more than doubled its forecast for a budget surplus in 2016/7 on a one-off spike in tax revenues, even as it cut its growth calculations for this fiscal year and next.
The New Zealand government more than doubled its forecast for a budget surplus in 2016/7 on a one-off spike in tax revenues, even as it cut its growth calculations for this fiscal year and next.
The government raised its budget surplus forecast to NZ$3.706 billion ($2.3 billion) in the year to June because of strong corporate tax revenues, up from a prior forecast of NZ$1.62 billion in its May budget economic and fiscal update.
It reduced its economic growth calculation for the year to June to 2.6 percent from 3.2 percent previously, and cut its growth projection of 3.5 percent in the year to June 2018 from 3.7 percent in the May budget update.
Wednesday's budget surplus will be a welcome windfall for the National Party government only weeks before a Sept. 23 election that has become tightly contested after a change in leadership boosted support for the Labour Party.
"Overall we've seen a slightly softer growth story but not markedly, just slightly softer over the four-year track," said Finance Minister Steven Joyce.
New Zealand has been among the fastest-growing developed economies in recent years, but first-quarter growth undershot expectations as construction output fell for the first time in two years.
The Treasury said strong population growth, a better international economy and fiscal and monetary stimulus would continue to underpin growth, but cut its growth projections for this fiscal year and next due to capacity constraints.
"They've basically decided they were a little bullish perhaps in the budget around some of the constraints in the construction sector," Joyce said, referring to previous Treasury forecasts.
If maintained, robust growth would allow the National Party to potentially announce a second family package in 2020 if it retained power in September's election, Joyce said.
A family package, which reduces income tax and increases government transfers to households, was announced in the May budget update and is due to take effect on April 1 2018.
