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Tuesday, 19 August 2014

PREFU: surplus, jobs and higher incomes still on track.

The PREFU (PRe-Election Financial Update) was released by Treasury this morning. Key points from the forecast are:
  • The Government’s operating balance before gains and losses is expected to be in surplus by $297 million in 2014/15 – down from $372 million in the Budget forecasts. Surpluses in each of the following three years will be smaller than forecast in the Budget.
  • Core Crown expenses are forecast to fall to 30.3 per cent of GDP by 2015, down from 35 per cent of GDP in 2011.
  • Because residual cash deficits continue for a year longer than forecast in the Budget, net government debt is expected to fall below 20 per cent of GDP in 2020/21 – when contributions are now scheduled to resume to the New Zealand Superannuation Fund.
  • Annual average GDP growth for the year to March 2014 was 3.3 per cent compared with the 3 per cent Budget forecast. Growth for the year to March 2015 is forecast to be 3.8 per cent (compared with the previous 4 per cent forecast) and then largely in line with previous forecasts. There were 83,000 more New Zealanders in jobs in the year to June 2014. 
  • Treasury’s Pre-election Update forecasts another 151,000 new jobs will be created by mid-2018. Unemployment is forecast to fall to 4.5 per cent by 2018 – down from 5.6 per cent in the June quarter of this year. 
  • In the two years to March, the annual average wage has increased by around $3,000. The Treasury forecasts it will increase further by around $6,600 to $62,000 by mid-2018.

We're heading in the right direction - let's stay on it!