New Zealand's Pre-Election Books Show Smaller Deficit Forecast

New Zealand's pre-election economic and fiscal outlook (PREFU) has been released by Finance Minister Nicola Willis, showing improved forecasts for the country's budget deficit. The government now expects a deficit of NZ$8.6 billion ($A7 billion) for the fiscal year ending June 30, 2027, down from last year's NZ$11.9 billion. This represents a significant reduction in the deficit, and is seen as 'welcome news' by Minister Willis.

The release of PREFU also gives the opposition Labour party more space to campaign on their economic policies, with the government promising to keep a tight fiscal leash to return to surplus next term. However, Labour has promised to publish its own fiscal plan, which includes a first surplus since 2018/19 and a reduction in debt over time.

The global environment remains challenging for New Zealand's economy, with ongoing US-Iran conflict delaying the country's economic recovery. Despite this, growth forecasts point to an end to the gloom, but unemployment is higher than at any point during the COVID-19 era, and inflation is again on the rise.