2020 Election: National Holds Its Breath Ahead of Tomorrow’s Government Books Opening

Finance Minister Grant Robertson is revealing shortly before the all-important opening of the government books tomorrow.

But he cautioned that revealing New Zealand’s GDP figures later this week “will not be a pleasant read.”

The Treasury will unveil its Pre-Election Fiscal and Economic Update (Prefu) tomorrow, something the law requires it to do before every election in New Zealand.

It will reveal a number of important economic data sets, such as the expected level of public debt, expected tax revenue figures, and projected future deficits.

That level of debt took center stage during the Budget, when the Treasury revealed that government debt would rise to $ 200 billion by 2024, that’s more than the just under $ 90 billion initially expected in 2020, earlier. Covid-19 hitting the economy.

Speaking at a BusinessNZ virtual debate this morning, Robertson said very little about Prefu, only that even though New Zealand’s debt level will rise to record highs, “it still compares very well to other countries.”

And it’s that debt level and Treasury projections that will be front and center for National tomorrow.

The party has deliberately postponed the release of its long-awaited revenue and tax policy until it has had a chance to analyze Prefu in detail.

Under the microscope of that policy will be National’s commitments to reduce debt to 30 percent of GDP “within a decade or so.”

“The ‘more or less’ is important,” said the party’s finance spokesman, Paul Goldsmith, given the high levels of uncertainty at this time.

This has also been an area of ​​special interest to Labor.

The party has pressed National to explain how it would achieve such an ambitious debt goal without cutting key areas of public spending.

National has countered that criticism by saying it would reveal details after it is reviewed via Prefu.

On an economic note, ANZ economists say they do not expect “massive changes” in what the Treasury will reveal tomorrow, adding that it is likely to be very similar to the Budget figures.

But when it comes to GDP figures, to be released by Statistics NZ on Thursday, ANZ has warned of a big contraction and forecast that quarterly growth will be -12 percent.

Although this is below its previous forecast of -17.5 percent, the data will still most likely reveal that New Zealand is in a recession, two consecutive quarters of negative GDP growth.

Robertson said the drop won’t be a “pretty reading” but said the economic contraction would be “one that we can recover from.”

Goldsmith broadly agreed, but blamed a “very tough lockdown” in March and April for what is expected to be one of the worst economic quarters on record.