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Half Year Economic and Fiscal Update 2016


The Half Year Economic and Fiscal Update (Half Year Update) 2016 provides the Treasury's latest economic forecasts, risk analysis and forecast financial statements of the Government, including the implications of Government financial decisions. The Treasury prepares this Half Year Update to the best of our ability to help the Government to make the most fully informed decisions about policies, and support the Government's fiscal objectives of paying down debt and increasing the surplus.

This Half Year Update examines recent developments and describes the current outlook for the New Zealand economy and Government's fiscal outlook. An important component of this analysis is also identifying potential risks that could affect the economic and fiscal outlook, especially given heightened uncertainty on both a global and local scale.

The New Zealand economy is currently performing well with sustained growth and an operating balance before gains and losses (OBEGAL) surplus expected for the year to June 2017. We expect this performance to be maintained despite the impact of the recent Kaikōura earthquakes (see page 6). We also expect the fiscal position to improve steadily. However, many factors could affect the outlook. Global volatility and a risk of lower trading partner growth could reduce forecast growth in the next four years, and higher net migration, domestic demand and more binding capacity constraints in the New Zealand economy could mean that inflationary pressure rises faster than expected.

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