Duration and scale of Middle East conflict expected to be key factors in terms of impact on NZ economy, Finance Minister Nicola Willis says

Finance Minister Nicola Willis says the key question observers and economists are asking about the economic impact of the conflict in the Middle East on New Zealand is, "what is the duration and scale of the conflict we are seeing?"

"So it is still too soon to say what is the impact for the New Zealand economy, because we don't yet know the full extent," Willis told reporters on Thursday.

"Overall, the effects are still relatively muted in comparison with the effects we've seen after recent global economic events."

Willis said a core question regarding oil was if the price of oil spikes considerably; "because there is a significant challenge in getting oil to markets, then that will have a greater effect than if the price of oil doesn't rise as significantly".

Regarding May's Budget, Willis said while forecasts were finalised in April, she was conscious they would have to take into account the impact from the conflict in the Middle East at that time.

"So that will be a factor, as well as the progress that we've seen over the months since the half year."

Commenting on the interim government financial statements for the seven months ending January 31, Willis said the forecasts were running; "more positive against what we were expecting, in terms of the debt position, in terms of the surplus position, the deficit position, and in terms of lower spending than had been forecast".

The operating balance before gains and losses excluding ACC (OBEGALx) was a deficit of $6 billion, $1.9b lower than forecast, and net core Crown debt was $184.3b, which was $1.1b lower than forecast.

"However, it's only seven months data, so it's always early to judge, because there can be movements throughout the year, and of course, we will be providing the full year update at a later date."