- Date published:
7:55 am, December 17th, 2020 - 66 comments
Categories: climate change, debt / deficit, Economy, employment, grant robertson, housing, International, Keynes, labour, poverty - Tags:
These are in remarkably good shape. Who would have predicted that dealing properly with a global pandemic would have had better results for the economy than timidly dealing with it and trying to ensure that economic activity continued?
And that making baby boomers stay home and spend their wealth on new kitchens or meals out or local holidays would be much better for the economy than spending the money on overseas holidays or overseas luxuries?
Whatever the reason the country’s figures are looking remarkably good.
From Radio New Zealand:
A faster and stronger economic rebound from the Covid-19 pandemic will see the government’s finances headed back to surplus sooner than expected, according to the Treasury.
The half year economic and fiscal update (HYEFU) shows lower budget deficits over the next four years as a strong tax take and lower expenses bolster the government’s finances.
“While New Zealand’s economy contracted in 2020 it is forecast to rebound strongly in 2021, outperforming regions we compare ourselves to like the Euro Zone, the United Kingdom and Japan,” Finance Minister Grant Robertson said.
Economic growth is forecast to be 1.5 percent in the year to June next year compared with a slight contraction forecast in the September pre-election update.
Unemployment is expected to peak at 6.8 percent in 2022 and then decline over the next three years to about 4 percent, compared to a 7.7 percent peak forecast in September.
The lower jobless rate was expected to reduce social welfare benefit costs as well as boost the tax take, which would also benefit from higher GST and corporate tax revenue.
“The fiscal position is still challenging,” Robertson said.
However, higher income and lower costs are expected to see smaller budget deficits.
Net debt is now forecast to peak at 52.6 percent of GDP in 2023 down from the PREFU prediction of 56%. If you look overseas the current figure for Germany is 60%, the UK is 81%, France is 97%, the United States is 107%, Italy is 135% and Japan is an eye watering 237%.
These figures provide a lot of fiscal headroom. Which is why I would urge the Government to consider spending on some areas where there are crises. Like:
This Government has the opportunity to be completely transformational. Now is not the time to hold back and look for a middle way. Now is the time to be brave. Let’s do this.