NZ Fiscal Forecasts Improve as Economy Grows

New Zealand's fiscal forecasts have improved, according to Finance Minister Nicola Willis. The Treasury's Pre-election Economic and Fiscal Update shows that the country is on track for stronger economic growth and a marked improvement in its fiscal position.

The forecast projects average economic growth of 2.6 per cent, with 220,000 more jobs and wages rising faster than prices. The deficit in the year ending July 2026 was $3.4 billion smaller than forecast in the Budget in May, reflecting stronger economic momentum.

Debt is forecast to begin declining as a share of the economy in 2028/29 and to fall in dollar terms in 2030/31, which Willis said would be the first such fall since 2017/18. The improved forecast means the government will borrow $15 billion less over the next four years through reduced bond issuance.

Willis attributed the upgrade to actual improved performance, with businesses doing better than anticipated and feeding into the government's bottom line through increased tax revenue. She cautioned that the improved forecast should not be treated as a reason to increase spending, saying global instability had not gone away.