The Treasury

Global Navigation

Personal tools

Scenarios

The following scenarios show how the economy might evolve if some of the key judgements in the main forecast are altered (Table 3.1). They illustrate two of the many ways that the economy may deviate from the main forecast. Scenario One illustrates the economic impacts of an international shock that lowers our trading partners' growth and increases global financial market volatility, prompting a fall in export demand, asset prices and the terms of trade, leading to lower investor and consumer confidence. Scenario Two shows the impact if the economy is unable to respond to high domestic demand as quickly as anticipated. In this scenario, inflationary pressures are stronger as prices are bid up, while consumption and investment are dampened.

Table 3.1 - Economic and fiscal variables for main forecast and scenarios
June years 2016
Actual
2017
Forecast
2018
Forecast
2019
Forecast
2020
Forecast
2021
Forecast
Real GDP (annual average % change)
Main forecast 2.8 3.6 3.5 2.9 2.4 2.3
Scenario One 2.8 3.3 2.4 3.0 3.1 2.5
Scenario Two 2.8 4.0 3.3 2.5 2.2 2.1
Unemployment rate1            
Main forecast 5.0 4.8 4.6 4.2 4.3 4.3
Scenario One 5.0 4.8 5.5 4.8 4.3 4.4
Scenario Two 5.0 4.7 4.5 4.2 4.3 4.3
Nominal GDP (annual average % change)
Main forecast 4.2 5.2 5.6 5.0 4.1 3.9
Scenario One 4.2 4.6 3.8 4.7 4.5 4.2
Scenario Two 4.2 5.9 6.0 4.8 4.0 3.9
Consumers price index (annual % change)
Main forecast 0.4 1.5 2.0 2.1 2.0 2.1
Scenario One 0.4 1.6 2.0 1.3 1.9 2.2
Scenario Two 0.4 1.8 2.3 2.3 2.1 2.2
Operating balance before gains and losses  (% of GDP)
Main forecast 0.7 0.2 1.2 1.8 2.2 2.7
Scenario One 0.7 0.3 1.6 2.2 2.6 3.1
Scenario Two 0.7 0.1 0.6 1.0 1.4 2.0
Net core Crown debt (% of GDP)
Main forecast 24.6 24.3 23.8 22.2 20.3 18.8
Scenario One 24.6 24.5 25.0 24.3 23.2 22.2
Scenario Two 24.6 24.0 22.9 21.0 18.9 17.0

Note: 1 June quarter, seasonally adjusted.

Sources: Statistics New Zealand, the Treasury

Page top