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Pre-Election Economic and Fiscal Update 2008

Finalisation Dates

The dates on which particular elements of this Pre-election Update were finalised are set out below.

Economic and fiscal forecasts - finalisation dates
Text finalised 26 September
Economic data 28 August
Economic forecasts (refer Chapter 1) 28 August
Tax revenue forecasts 4 September
Fiscal forecasts (refer Chapter 2), including: 17 September
  • Government decisions and circumstances
17 September
  • Actual asset revaluations
30 June
  • Foreign exchange rates
30 June
Specific fiscal risks (refer Chapter 4) 23 September
Contingent liabilities and commitments (refer Chapter 4) 30 June

Between the finalisation of the economic forecasts on 28 August and the finalisation of the text of the Pre-election Update on 26 September, a number of developments have taken place, including:

  • The international financial crisis has continued to develop, with the US government taking control of Fannie Mae and Freddie Mac; US investment bank Lehman Brothers filing for bankruptcy protection; retail brokerage Merrill Lynch being bought by Bank of America; the US Federal Reserve announcing a rescue package for insurance company AIG; and the US Treasury developing a comprehensive plan to purchase “troubled assets” in order to stem further financial collapse.
  • On 11 September the Reserve Bank of New Zealand cut the official cash rate by 50 basis points to 7.5%.
  • The price of oil (West Texas Intermediate) fell to a low of US$91/barrel on 16 September, but increased again to US$111 on 25 September, just below its close of US$116 on 28 August.
  • The NZ dollar fell to 61.9 on the Trade Weighted Index on 16 September but strengthened again to 64.2 on 26 September.

These international financial crisis developments, while not leading us to change our overall view of the economy, have increased the risks of a sharper downward correction.

 

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