WELLINGTON: New Zealand trimmed its economic growth forecast for 2020 and flagged a budget deficit, as it announced plans on Wednesday to boost capital spending to its highest level in about 20 years.
The country’s Treasury department predicted a NZ$0.9 billion budget deficit in the current 2019/20 year in its half-year economic and fiscal update, down from the NZ$1.313 billion it had forecast in its May budget.
“A small deficit in the current year is not surprising, given the impacts global headwinds are having on confidence here,“ Finance Minister Grant Robertson said in a statement.
Treasury also trimmed expected surpluses for 2021 and 2022 as economic growth slows amid global headwinds like the U.S.-China trade war and Brexit uncertainty. It forecast NZ$12 billion worth of surpluses across the four years to 2023/24.
Robertson said that while economic growth was expected to grow more slowly - the growth forecast was cut to 2.3% this year, from the previously forecast 3.2% - New Zealand was still outperforming its peers.
“The economy continues to grow, it continues to outpace most other economies,“ he told reporters.
Robertson said the government planned to spend NZ$12 billion on new infrastructure investment, which he said was the highest level of capital spending in more than 20 years. -Reuters