NZ govt shows highest surplus since 2008

8:46 AM October 8, 2019

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. 

The NZ economy is continuing to build its fiscal buffer to help itself avoid any economic downturn. Source: Bloomberg

The content of this report has been created by X-Trade Brokers Dom Maklerski S.A., with its registered office in Warsaw, at Ogrodowa 58, 00-876 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. X-Trade Brokers Dom Maklerski S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.

Share:
Back