World Economic outlook - New Zealand economic growth outlook 2012-2013 : The New Zealand economy may grow at a weaker-than-expected rate in the year to March 2013 due to the impact of the recent global developments, according a report from the Treasury.
The Treasury, in its briefing to the incoming Finance Minister, said it is lowering the real gross domestic product forecast for the year ending March 2013 by about half a percentage point from that in the Pre-election Economic and Fiscal Update to around 3 percent.
The report observed that the financial markets are displaying significant volatility and heightened risk aversion and uncertainty due to ongoing concern over the sustainability of public debt in Europe and the US, increased worries over the health of the European banking sector and a weakening in the outlook in advanced economies.
Though forecasts of global growth are being revised down, the prospect of volatile and more expensive credit markets and the impact of lower global growth on commodity prices are the greatest risks to New Zealand's growth outlook, the Treasury said. The next official forecasts will be released in Budget 2012 to be published on February 16.
New Zealand's economic growth has been weak for some time and the large fiscal deficit and high level of external indebtedness continued to expose the economy to risks. The slowdown in growth has also revealed that the current overall cost of government program is too high, the report noted.
In a speech in Auckland last week, Prime Minister John Key said the country is on track to post a budget surplus in 2014/15. He said the Budget Policy Statement would show a forecast surplus in the range of NZ$300 to NZ$500 million in that year.
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