Summary of Economic outlook

Key Messages

  • Economic growth is expected to ease over 2016 in response to lower global growth, the falling terms of trade and muted domestic demand
  • Growth is expected to pick up from the end of 2016 as the terms of trade recover and stimulatory monetary conditions support domestic demand
  • The government has refreshed it’s fiscal targets having achieved surplus in 2014/15
  • The operating balance before gains and losses is expected to remain broadly in balance over the next three years, followed by rising surpluses
  • Ongoing Budget restraint will be necessary to achieve the government’s fiscal targets, including reducing net debt to around 20% of GDP in 2020

Table 1: Summary of the Treasury's main economic and fiscal forecasts

Statistics New Zealand, The Treasury

2015
Actual		2016
Forecast		2017
Forecast		2018
Forecast		2019
Forecast		2020
Forecast
Economic (March years, %)
Real GDP growth1 3.2 2.1 2.4 3.6 3.0 2.2
Unemployment rate2 5.8 6.5 6.1 5.3 4.7 4.5
CPI inflation3 0.3 1.4 2.1 1.9 2.1 2.2
Current account balance4 -3.5 -4.8 -6.0 -4.5 -3.9 -4.3
Fiscal (June years, % of GDP)
Total Crown OBEGAL5 0.2 -0.2 0.1 0.4 1.2 1.7
Net core Crown debt6 25.2 26.9 27.7 27.1 25.6 24.0
Net worth attributable to the Crown 35.9 35.5 35.2 34.3 34.9 36.2

Notes

1 Real production GDP, annual average percentage change.
2 Percent of labour force, March quarter, seasonally adjusted.
3 CPI, annual percentage change, March quarter
4 Annual balance as % GDP
5 Total Crown operating balance before gains and losses (OBEGAL).
6 Net core Crown debt excluding the New Zealand Superannuation Fund (NZS Fund) and advances.

Further Information