Economic and Tax Outlook (continued)
Economic Growth and Tax Revenue Lower than Previously Forecast
- Figure 1.1 - Real gross domestic product
- Source: Statistics New Zealand, The Treasur
The New Zealand economy, like a number of others, is currently facing imbalances in the areas of inflation, household debt, house prices and the current account. As a result of drought, higher consumer prices and previous monetary tightening, output declined in the first two quarters of 2008 and is expected to have declined marginally in the September quarter. Growth is forecast to be positive in the final quarter of 2008 thanks to the recovery from the drought and tax cuts, but will remain subdued throughout most of 2009 as negative influences continue to affect the economy. As the world economy recovers, the domestic economy picks up and inflation and monetary conditions ease, growth will return above trend later in the forecast period, driven initially by increased exports (Figure 1.1). With economic activity forecast to be lower than in the Budget Update, core Crown tax revenue is expected to be $3,148 million lower in aggregate over the next four years.
| June years, $million | 2007/08 Est./actual |
2008/09 Forecast |
2009/10 Forecast |
2010/11 Forecast |
2011/12 Forecast |
2012/13 Forecast |
|---|---|---|---|---|---|---|
| Budget Update 2008 | 56,673 | 56,523 | 58,228 | 60,319 | 62,712 | N/A |
| Pre-election Update | 56,747 | 56,058 | 57,415 | 59,268 | 61,893 | 65,084 |
| Difference | 74 | (465) | (813) | (1,051) | (819) | N/A |
Source: The Treasury
