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Treasury warns Key of lower growth, higher unemployment, bigger budget deficit
The details of Treasury's briefing on the economic and budget outlook yesterday to incoming Prime Minister John Key have been published. They show Treasury expects lower economic growth, higher unemployment and a bigger budget deficit over the next five years because the global and financial outlook had deteriorated since forecasts for the pre-election fiscal update (PREFU) were prepared before the election.
Documents released by interim Finance Minister Michael Cullen showed Treasury now expected the unemployment rate to rise to a peak of 5.7% rather than the 5.1% previously forecast and the 4.2% in the September quarter. It also forecast lower nominal GDP growth of around NZ$2-4 billion a year over the next five years, with a cumulative reduction in GDP growth NZ$15 billion over the 2009-2013 fiscal years.
This meant the likely budget deficits would be NZ$1.5 billion lower per year from 2010/11 onwards and result in cumulative increases in budget deficits and debt of around NZ$5 billion over the next five years.
Yesterday incoming Prime Minister John Key was quoted as saying the briefing did not predict "Armageddon" and the currently planned infrastructure spending and tax cuts would be enough of a stimulus to revive the economy, along with expected interest rate cuts.
6 Comments
In a few weeks time
In a few weeks time one can hear the government saying: "Sorry the world- wide economy situation is far more serious then predicted- we can not keep our election promises at the current time/ levels.
But- opps they are politician's they say things differently or -nothing at all.
W.K - I agree, the
W.K - I agree, the actual economic situation is far worse than the officials are telling us.
But it is very obvious with the number of companies reporting reduced earnings, lowering earning forecasts, business laying off staff, lower retail sales, higher defaults on mortgages, stock market declines etc ( I could go on but you get the picture), that the NZ economy is in just as much trouble as the rest of the world.
Matt
"that the NZ economy is
"that the NZ economy is in just as much trouble as the rest of the world."
I disagree, I would much rather be in Aussie or NZ than just about any other country.
here's what Americans think Among
here's what Americans think
Among noneconomists, there is much more concern about what lies ahead. In October, a CNN poll found that 59 percent of Americans believe another 1930s-style depression is very or somewhat likely. Dismissing feel-good suggestions that the turmoil on Wall Street won't have much impact on the rest of the economy, 55 percent of the respondents said the financial crisis would affect them personally within the next year. A separate poll for Condé Nast Portfolio shows that people working in the finance business are even gloomier: 77 percent of them say their industry is in a state of crisis, and 50 percent say the economy is the worst it has been in their careers.
DEFLATION
Steptoe, Worse than the rest
Steptoe, Worse than the rest of the Western World type economies because of the isolated nature of a mere 4millon who might try make a lot of noise internationally but in reality hardly exist numerically or financially! However, I agree it might be a better place to vegetate for a few years..unless a land of too many get that idea!!!!.
As I said months ago
As I said months ago ... Bollard and crew needs to look out the cockpit window rather than head down looking at the instruments (Did you see what happened to the brand new 200milllion A320 Airbus in France when the Middle Eastern crew in a ground test open the throttles to fullpower did not know how to read the instruments or understand the controls then pushed the wrong button!!Pictures from the hushed up write off are leaking out!) .
Europe's largest economy Germany has just put up its hand and said we are in trouble. Uk are in financial strife.The USA is in heading for big, big trouble and they know it. Japan the world's second largest economy knows it is in trouble but can't fathom the extent.Australia is admitting it is hurting.
NZ says we are all right Jack !!!!Reminds me of the story of the boy who cried wolf...when there was finally a big problem nobody believed him and his sheep were eaten!!!!!