Is the NZ economy really getting better, or is it just better than expected? - The Front Page
The Government has opened its books, showing that a return to surplus is well on track.
The Pre-election Economic and Fiscal Update shows a stronger and slightly faster surplus than predicted ... with the books expected to get out of the red by 2028/29.
Treasury also predicts unemployment has already peaked – and will track down.
It’s not all sunshine and rainbows ... predictions of house price growth have been slashed, and there are some choice words about how costly our super is.
NZ Herald business editor-at-large Liam Dann told The Front Page the headline here is that the economy’s just looking better than it did in April.
“It shouldn’t be a huge surprise because we actually had the second quarter GDP, and that wasn’t as bad as most of the economic forecasters had thought.
“We got a little bit of growth, and in basic terms, if the economy is growing more, it just means more businesses are making some money; it means higher tax take basically, and so more revenue for the Government.
Net core Crown debt is expected to rise from 41% of GDP in June to a peak of 43.9% in 2027-28 before tracking down again. In May, the Treasury actually saw debt peaking at 46.1% of GDP.
Debt to GDP has been rising since Covid, before which it was well below 20%.
“Nicola Willis, in the long term, wants to get it back to around 40%.
“These are slightly arbitrary numbers, but historically we had Finance Ministers like Michael Cullen and Bill English who both liked to have that ratio down around 20%, so the Government had capacity to deal with a major shock. Then we had a major shock in Covid, and it blew out big time,” Dann said.
Listen to the full episode to hear more about:
- Weak house price growth
- Inflation
- Unemployment
- Concern around super.
The Front Page is a daily news podcast from the New Zealand Herald, available to listen to every weekday from 5pm. The podcast is presented by Chelsea Daniels, an Auckland-based journalist with a background in world news and crime/justice reporting who joined NZME in 2016.
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