Treasury's Improved Forecasts Give Government Pre-Election Boost

New Zealand's government has received an unexpected pre-election boost thanks to improved economic forecasts from the Treasury.

The Pre-election Economic and Fiscal Update (Prefu) released on Tuesday showed a deficit of $6.8 billion in 2026/27, down from the May Budget's $11.4 billion prediction.

This is a significant improvement, with the books forecast to return to surplus in 2028/29, as promised by National's election pledge. The surplus for that year is predicted to be $4 billion, up from the Budget's $2.6 billion estimate.

Treasury officials attributed the improved forecasts to 'higher and more persistent' inflation, which has driven an increased tax take. However, this also comes with a warning about longer-term risks and uncertainty in the economy, particularly due to the ongoing oil price shock from the Middle East conflict.