New Zealand: Fiscally drifting – Standard Chartered

The Government maintained its goal of returning to a surplus for fiscal year 29; But the trajectory of the deficit has been extended materially. Growth forecasts were reduced along the forecast horizon. The short -term broadcast was reduced, but the total indebtedness along the forecast horizon was reviewed at 4,000 million NZD. The budget recently to change the monetary policy perspective in the short term, Standard Chartered economists report, Bader al Sarraf and Nicholas Chia.

The margins are adjusting

“The New Zealand Budget 2025 adopted a short -term restriction tone, reducing the operational allocation to 1.3 billion NZD, the lowest level in more than a decade, while maintain Objective of returning to a surplus for fiscal year 29 (which ends in June 2029), although there is still a deficit of 12.1 billion NZD (2.6% of GDP) for fiscal year 26, around 1.6 billion nzd broader NZD It does not comply or if spending pressures resurface. “

“Although the issuance of bonds for fiscal years 25 and 26 was reduced by 4,000 million NZD, this was compensated for increases in subsequent years, including an increase of 6,000 million NZD in fiscal year 29. In general, gross broadcast during the four -year forecast horizon increases by 4,000 million NZD to 175,000 million NZD (42% of GDP). Despite the relief Term, the financing task remains considerable as the maturities of the large -scale asset purchase program (LSAP) of the New Zealand Reserve Bank (RBNZ) are complied with and the debt service costs increase. ”

“As for monetary policy, we believe that the 2025 budget is unlikely that the short -term trajectory of the RBNZ is unlikely. For the RBNZ, we think that the message is clear: while fiscal policy supports deflation, monetary policy will continue to be the main anchor, particularly as global risks and medium -term pressures persist.”