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Business Weekly Economic Report
Finding stability
Tuesday, 02 June 2009
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Last Thursday’s Budget showed a sizable lift in Crown debt levels over the next few years, which was to be expected. The fiscal forecasts show that the operating balance is not expected to return to surplus until 2019, making for 10 years of operating deficits.
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Soaring government debt is becoming a global pandemic as governments borrow to make up for falling revenues or roll out stimulus packages. NZ’s net Government debt is projected to peak at 35.9% of GDP and gross debt issuance at 42.9%.
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There was a lot riding on this Budget, particularly whether it would be enough to avoid a potentially expensive credit rating downgrade. It would appear the Government has been successful, with Standard and Poor’s putting NZ’s credit rating outlook back to stable.
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Report Prepared by:
Jane Turner
ASB Economist
Phone: +64 9 374 8185
Fax: +64 9 302 0992
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