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Analysts at the Bank of New Zealand (BNZ) offer a sneak peek into New Zealand’s 2019 Budget due to be announced this Thursday.

Key Quotes:

“Likely to have a feel-good factor around the dollars and cents outlook.

Treasury’s GDP growth forecasts will surely be curbed of their recent enthusiasm (recalling that December’s HYEFU anticipated 3.1% growth for 2019 and 3.0% for 2020). However they will probably still be rosy enough to allow for sustained/increasing operating surpluses, and net debt tending to about 20% of GDP, over the next few years.

What about the government’s move to a net debt target range of 15 to 25% of GDP beyond 2021/22? At one level it’s all quite sensible, and so shouldn’t bother anybody (including the rating agencies).

Point forecasts can often be man-made rods for one’s back (witness the selfflagellation over achieving 2% CPI inflation, and occasional exercises in economic forecast “accuracy”). Even 25% net debt would still be very low by international standards.”