NZ govt shows highest surplus since 2008

8:46 AM 8 October 2019


  • 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

This content has been created by X-Trade Brokers Dom Maklerski S.A. This service is provided by X-Trade Brokers Dom Maklerski S.A. (X-Trade Brokers Brokerage House joint-stock company), with its registered office in Warsaw, at Ogrodowa 58, 00-876 Warsaw, Poland, (KRS number 0000217580). X-Trade Brokers Dom Maklerski 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. This report is provided for information and marketing purposes only. Any opinion, analysis, price or other content does not constitute investment advice or recommendation. The content represents the view of our experts on a generic basis, and does not take into consideration individual readers personal circumstances, investment experience or current financial situation. Past performance or future forecasts does not constitute a reliable indicator of future results. XTB will not accept any responsibility for any loss or damage, including, without limitation, any loss of benefit, which could derive directly or indirectly from the use or reliance of such information.