ANALYSIS: NZ Headed for a Prolonged Recession, New Government Says

Analysis The finance minister promised a “mini mini” budget, and MP Nicola Willis certainly delivered that with a document just six pages long. Nonetheless, it contained some deep cuts to public services and, when combined with the accompanying Half-Year Economic and Fiscal Update (HYEFU) from the Treasury, painted a bleak picture of New Zealand’s medium-term economic future. Since the last update in September, core Crown revenue has fallen by NZ$1.6 billion over the forecast period while expenses have grown, mainly due to more borrowing and higher interest costs. Treasury warns of a prolonged contraction in real GDP per capita growth, sparking a recession which could last two years and a consequent decline in living standards. The cumulative effect of this is to reduce the $2.1 billion surplus in 2027, which Treasury forecast in September, to just $140 million....