16.12.202503:53:06UTC+00New Zealand Sees No Surplus Before 2030

New Zealand is not expected to return to a budget surplus until 2030 due to the drag of a sluggish economy, which is hampering efforts to curtail government spending. According to the government's mid-year fiscal update issued today, the deficit for the current year is anticipated to widen to NZD 16.93 billion, up from the NZD 15.60 billion forecast in May. This adjustment reflects slower economic growth, diminished tax revenues, and increased borrowing costs. The economy has retracted in three out of the last five quarters, impacted by subdued consumer spending and global economic uncertainties. However, third-quarter data, due for release later this week, is expected to indicate expansion. The Treasury predicts economic activity will strengthen over the next 18 months, with Finance Minister Nicola Willis expressing that the economy needs "fresh air in its lungs" to achieve robust recovery by 2027. Projections suggest GDP will hit a high of 3.4% in 2027 before declining to 2.5%. Inflation is expected to return to approximately 2%, and unemployment is projected to fall below 5%. The Treasury's outlook hinges on a robust housing market, increased migration, and strong export performance, although it warns of potential risks in both positive and negative directions.