Overview
- Treasury’s half-year update projects a current-year deficit of NZ$16.93 billion, wider than the NZ$15.60 billion forecast at the May budget.
- Including nationwide accident insurance costs, the forecasts show no return to surplus within the five-year horizon, with a NZ$60 million deficit still expected in the year to June 2030.
- Net government debt is now seen peaking at 46.9% of GDP in 2027/28, slightly higher than the May projection.
- Treasury cuts near-term growth to 1.7% for the year to June 2026 and sees a pickup to 3.4% the following year, with inflation at 2.4% in 2025/26 after an economy that shrank in three of the past five quarters.
- Willis says spending restraint will continue with any new funding focused on health, education, defence, and law and order, as market commentary views the update as neutral to mildly negative for the New Zealand dollar and supportive of limited upward pressure on yields.