24 May 2012

Government forecasts on track to 2014/15 surplus

10:40 pm on 24 May 2012

Thursday's Budget confirms that the Government intends to return its books to surplus by the 2014/15 financial year.

The documents are also forecasting a lower deficit for the current financial year compared with the Treasury's most recent estimate in February.

The deficit is now forecast to be $8.4 billion, lower than the $12 billion deficit previously projected for the year to the end of June.

The Government says this reflects the lower-than-expected government spending and a delay in some spending including on earthquake-related costs.

But the deficit for the coming 2012/13 year has risen to $7.9 billion, up from $5.6 billion previously forecast.

The Government says it is on track to achieve a $197 million surplus in the 2014/15 year, down from the $370 million surplus forecast in February's Budget Policy Statement.

It says net debt will peak at 28.7% of Gross Domestic Product in 2013/14 and fall in subsequent years.

The forecasts for the Government's books come as the Treasury cut its forecasts for economic growth over the next three years.

The Treasury now expects GDP to increase by 1.6% in this financial year, down from 1.9% predicted in February's Budget Policy Statement.

Growth in the 2012/13 year is expected to rise to 2.6%, less than the 2.8% forecast in February.

Growth is expected to pick up to 3.4% in 2013/14, lower than February's pick of 3.8%.

The forecasts for the 2014/15 and 2015/16 years are higher than forecast in February's Budget Policy Statement.

Unemployment is expected to peak at 6.3% in the current year and fall to 4.7% in 2015/16.