New Zealand's economy seen doing better in the near term

Credit: REUTERS/PRAVEEN MENON

New Zealand’s economy bounced back faster from a lockdown put in place to limit the spread of the coronavirus pandemic, forecasts released by the treasury department showed on Wednesday.

By Praveen Menon

WELLINGTON, Sept 16 (Reuters) - New Zealand’s economy bounced back faster from a lockdown put in place to limit the spread of the coronavirus pandemic, forecasts released by the treasury department showed on Wednesday.

New Zealand's operating deficit for the year ending June was seen at NZ$23.29 billion, lesser than a deficit of NZ$28.293 billion forecasted in the annual budget in May, the pre-election Economic and Fiscal Update showed.

The country's debt levels was seen at 27.6% of the gross domestic product at June 30, lower than the budget forecast of 30.2%.

But a recovery is seen to slow in the long term as debt peaks to about 56%, and the world continues to fight the COVID-19 pandemic.

The June quarter GDP is forecast to contract 16%, lower that a 23.5% fall forecasted in the budget.

Finance Minister Grant Robertson said the economy is expected to grow by an average 4.2% across 2021 and 2022, compared to Australia at 3.6% and the U.S. at 3.5%.

Unemployment rates were seen peaking at 7.8%, down from 9.8% jobless rates forecasted in the budget largely due to wage subisdy and other schemes launched by the government.

(Reporting by Praveen Menon)

((praveen.menon@thomsonreuters.com; +6448028163; Reuters Messaging: praveen.menon.thomsonreuters.com@reuters.net; Twitter: https://twitter.com/Journopraveen))

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