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Risks and Scenarios


  • The global economic outlook remains uncertain and poses risks to the New Zealand economy. While the initial short-term challenges, in Europe for example, have partly been addressed, ongoing medium-term challenges for the global economy remain.
  • The uncertainties around the pace of growth in the domestic economy lie mainly with the growth in household spending and the timing and scale of the Canterbury earthquake rebuild.
  • There are upside and downside risks to the forecasts included in the Economic Outlook and Fiscal Outlook chapters. In pre-global financial crisis conditions, we might expect outcomes better or worse than the main forecasts with roughly a 50-50 split. However, the balance of risks in these forecasts is on the downside.
  • The balance of these risks also means that the Government's fiscal strategy will remain challenging, as illustrated by the scenarios presented in this chapter. In the downside scenario nominal GDP is $25 billion lower than the main forecasts, compared to $15 billion higher in the upside scenario. Also, the operating balance remains in deficit over the forecast period in the downside scenario. While the operating surplus in the upside scenario is larger than in the main forecasts, a surplus is achieved in the same year.
Table 3.1 - Comparison of scenarios with the main forecasts
Nominal GDP1 Tax revenue1 Operating surplus2 Net core Crown debt
as at June 20163
Upside Scenario +$15 billion +$5.4 billon Yes
(same year, 2015)
-1.9% of GDP
Downside Scenario -$25 billion -$8.1 billion No
(outside forecast period)
+4.4% of GDP


  1. 5-year cumulative change from main forecasts
  2. Operating balance before gains and losses. “Yes” or “No” refers to whether or not a surplus is achieved within the forecast period, June 2012-June 2016
  3. Change from main forecasts

Source: The Treasury

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