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WELLINGTON, Dec 15 (Reuters) – New Zealand will return to a budget surplus sooner than expected and take on less debt as the economy is more resilient than expected, the government said on Wednesday.
The Treasury Department has forecast the deficit to reach 20.8 billion New Zealand dollars ($14.01 billion) in the current year, but the books will return to a surplus in 2023/24, around 2 years ahead of previous forecasts.
“New Zealand’s economy has performed well since the start of 2021, although that strength has been tested by the arrival of Delta,” Finance Minister Grant Robertson told a conference. Press.
Gross domestic product (GDP) is expected to fall around 6% in the September quarter, due to the economic impact of the Delta outbreak. But it will gradually recover in the December and March quarters of 2022, with growth of 3.7% and 3.8% respectively, according to the Treasury’s semi-annual economic and fiscal update (HYEFU). GDP will reach 4.9% by 2023/24.
Net debt will be higher at 37.6% of GDP in 2021/22 from 34.0% forecast in May. Net debt peaks at 40.1% by 2022/23 before falling to 30.2% by the end of the forecast period.
New Zealand has implemented some of the toughest pandemic restrictions and borders in the world, which has limited the spread of COVID-19 and helped its economy rebound faster than many other countries.
The South Pacific nation plans to gradually open its borders from January next year.
($1 = 1.4843 New Zealand dollars)
Reporting by Praveen Menon
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