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Half Year Economic and Fiscal Update 2015

Alternative Scenarios

The following scenarios show how the economy might evolve if some of the key judgements in the central forecast are altered (Table 3.1). They illustrate two of the many ways that the economy may deviate from the central forecast. Scenario One represents the economic impacts if productivity growth is weaker, demand is less responsive to monetary policy and inflation is less responsive to spare capacity than in the central forecast. Scenario Two shows the economic impact if dairy prices recover faster than in the central forecast and if net inward migration and visitor arrivals are higher.

Table 3.1 - Economic and fiscal variables for central forecast and scenarios
March years 2015
Actual
2016
Estimate
2017
Forecast
2018
Forecast
2019
Forecast
2020
Forecast
Real GDP
(annual average % change)
Main forecast 3.2 2.1 2.4 3.6 3.0 2.2
Scenario One 3.2 1.9 2.1 2.9 2.4 2.1
Scenario Two 3.2 2.3 2.8 3.7 3.0 2.1
Unemployment rate1
Main forecast 5.8 6.5 6.1 5.3 4.7 4.5
Scenario One 5.8 6.9 6.3 5.5 5.0 4.8
Scenario Two 5.8 6.2 5.8 4.9 4.5 4.5
Nominal GDP
(annual average % change)
Main forecast 3.6 2.7 3.0 6.0 5.6 4.1
Scenario One 3.6 2.5 2.0 5.1 4.8 3.9
Scenario Two 3.6 3.4 3.7 6.0 5.1 4.1
Consumers price index (annual % change)
Main forecast 0.3 1.4 2.1 1.9 2.1 2.2
Scenario One 0.3 1.2 1.7 1.8 1.8 2.0
Scenario Two 0.3 1.4 2.2 2.0 2.3 2.3
Operating balance before gains and losses
(% of GDP)2
Main forecast 0.2 -0.2 0.1 0.4 1.2 1.7
Scenario One 0.2 -0.2 -0.1 -0.3 0.2 0.6
Scenario Two 0.2 0.1 0.6 0.9 1.7 2.1
Net core crown debt
(% of GDP)2
Main forecast 25.2 26.9 27.7 27.1 25.6 24.0
Scenario One 25.2 27.1 28.4 28.7 28.3 27.8
Scenario Two 25.2 26.4 26.6 25.5 23.6 21.7

Notes:

  1. March quarter, seasonally adjusted.
  2. June years.

Sources: Statistics New Zealand, the Treasury

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