Treasury Report Shows Economic Recovery, but Labour Criticizes National's Management
New Zealand's Treasury has released its Pre-election Economic and Fiscal Update, showing an improved government balance sheet but continued pressure across parts of the economy. Unemployment reached 5.6 percent in the June quarter, with 171,000 people unemployed, according to Stats NZ.
Annual inflation was running at 4.1 percent in June, above the Reserve Bank's 1 to 3 percent target range. Petrol prices were 27.5 percent higher than a year earlier and electricity prices were up 12 percent.
The economy is no longer contracting, with GDP increasing 0.2 percent in the June quarter after rising 0.9 percent in March. Treasury expects the recovery to strengthen during the second half of this year, forecasting unemployment to gradually fall from 5.6 percent to 4.3 percent by the end of its forecast period.
The Government's financial position has also improved significantly since the May Budget, with the operating deficit, excluding ACC, expected to fall to $6.8 billion this financial year. Treasury attributes the improvement to higher tax revenue and expenditure restraint, which is forecast to fall from 32.1 percent of GDP in 2025/26 to 29.8 percent by 2030/31.