Summary:
- NZ government shows a higher than forecast budget surplus in the 2019 fiscal year ended in June
- A higher surplus signals the country has room to loosen the purse strings to avoid a deeper economic downturn
- NZ dollar trades higher in the aftermath of the release
The New Zealand’s government showed on Tuesday that its budget surplus widened in the 2019 fiscal year 2 billion NZD to 7.5 billion NZD, the highest nominal value since the great financial crisis in 2008. This figure also beat assumptions presented in May suggesting a surplus being 4 billion NZD lower. In turn, compared to the same period last year the surplus was higher by 2 billion NZD. On top of that, the government showed its net debt falling to 19.2% of GDP, down from 19.9% a year ago. The data shows that the NZ economy has quite a lot of fiscal space to loosen the purse strings in order to repel a possible economic downturn.
Therefore, one may note that the country has also entered a group of countries holding such space like Germany, the Netherlands or South Korea. That could be an important aspect for a small economy like New Zealand being strongly dependent on what happens abroad, especially in China. As presented in the graph below, at the end of the past year, the country had a 0.1% of GDP surplus in the general government account allowing also for other state units.
Start investing today or test a free demo
Open account Try demo Download mobile app Download mobile app
The NZ economy is continuing to build its fiscal buffer to help itself avoid any economic downturn. Source: Bloomberg
This content has been created by XTB S.A. This service is provided by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, entered in the register of entrepreneurs of the National Court Register (Krajowy Rejestr Sądowy) conducted by District Court for the Capital City of Warsaw, XII Commercial Division of the National Court Register under KRS number 0000217580, REGON number 015803782 and Tax Identification Number (NIP) 527-24-43-955, with the fully paid up share capital in the amount of PLN 5.869.181,75. XTB S.A. conducts brokerage activities on the basis of the license granted by Polish Securities and Exchange Commission on 8th November 2005 No. DDM-M-4021-57-1/2005 and is supervised by Polish Supervision Authority.
