New Zealand Budget Deficit To Widen Less Than Anticipated

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New Zealand's cash deficit is expected to decline after rising to NZ$11.35 billion in 2011, the Treasury reported Tuesday. In May, the government had estimated the deficit to widen to NZ$12.52 billion.

Today, the treasury upgraded the economic outlook and estimate recovery in 2011. The economy is expected to shrink 0.4% during the twelve months ended March 2010, better than the 1.7% decline estimated in May.

"Growth matters because it creates jobs, increases incomes and improves the living standards of New Zealand families," Finance Minister Bill English said today in issuing the Half-Year Economic and Fiscal Update and 2010 Budget Policy Statement.

Further, the treasury expects the jobless rate to peak at 7% in 2010, down from its 8% estimate in the May budget. "However, it is likely to remain at elevated levels throughout 2010, even as the economy improves. So the year ahead will remain difficult for many New Zealanders," said English.

Economists at Westpac Bank said the New Zealand Government is stuck between a rock and a hard place. In terms of economic growth, infrastructure and the tax system will be in the spotlight when the Budget is released next year. On fiscal restraint, broader spending caps are being investigated, while the management of the governments' assets is also being scrutinized.

New Zealand's cash deficit is expected to decline after rising to NZ$11.35 billion in 2011, the Treasury reported Tuesday. (Market News Provided by RTTNews)