WELLINGTON, Dec. 15 (Xinhua) -- The New Zealand government's books are forecast to be back in surplus "sooner than expected as economic and fiscal outlooks improve," Finance Minister Grant Robertson said on Wednesday.
"The New Zealand economy has performed well since the beginning of 2021, though that strength has been tested by the arrival of Delta," Robertson said after releasing the latest economic and fiscal forecasts in the 2021 Half Year Economic and Fiscal Update.
While the Treasury is forecasting a decline in Gross Domestic Product in the September quarter, the outlook is positive with a forecast bounce back in the December quarter of 3.7 percent, said Robertson who is also deputy prime minister.
The labor market continues to be resilient with unemployment falling to a record 3.4 percent in the September quarter and Treasury forecasting a further drop to 3.1 percent in the March quarter before heading towards 4.1 percent at the end of the forecast period, he said.
"Inflation is forecast to peak in the March quarter next year then fall across the rest of 2022 towards the Reserve Bank's two percent mid-point over the rest of the forecast period," he added.
While the Operating Balance before Gains and Losses (OBEGAL) deficit increases in the current year, it is expected to return to surplus in 2023-2024, which is earlier than expected, Robertson said.
Net debt is forecast to peak at 40.1 percent of GDP in 2022-2023 before falling to 30.2 percent at the end of the forecast period. This is lower than the peak of 48 percent forecast at Budget 2021, he said.
Core Crown expenses (The day-to-day spending) are forecast to drop significantly from 35.3 percent of GDP to 30.5 percent next year, and then track lower over the rest of the forecast period, he added.
"We can look forward to 2022 with cautious optimism as the economic and fiscal outlook is good," Robertson said, noting challenges ahead include supply chain disruptions, higher inflation and ongoing COVID impacts that may affect these forecasts.
However, he said New Zealand is well placed to meet those challenges. Enditem