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Challenges and Choices: Modelling New Zealand’s Long-term Fiscal Position

4.4  Comparing economic assumptions: 2006 and 2009

Figure 4.4 shows the forecast and projections of labour force participation, unemployment and productivity from both the 2006 and 2009 Statements. Real GDP, a function of these variables, is also plotted.

The key difference between the 2006 and 2009 projections results from the effects of the recession. Output is below potential for a period, with unemployment recovering to its long-term rate of 4.5% by 2015. Longer term, real GDP is slightly higher by 2050 than projected in 2006, primarily reflecting slightly higher projections for the size of the labour force.

Figure 4.4 - Key economic variables in 2006 and 2009 projections
Figure 4.4 - Key economic variables in 2006 and 2009 projections.
Source: The Treasury

Notes:

  1. Labour productivity is an index constructed using annual growth rates with the base set to 100 in 2006.
  2. Real GDP is measured in $ billions in 1995/96 prices.
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