New Zealand Trims Deficit Forecast Ahead of Nov. 7 Election as Treasury Projects Earlier Surplus

New Zealand's government on Sept. 29 forecast a smaller budget deficit and lower debt than projected in its May Budget, projecting an operating balance before gains and losses (OBEGAL) deficit of NZ$8.73 billion ($4.94 billion) for the fiscal year ending June 30, 2027, versus NZ$14.09 billion previously. A return to OBEGAL surplus is now expected in 2028-29, a year earlier than May's 2029-30 projection. Prime Minister Christopher Luxon, whose centre-right National Party trails Labour narrowly in polls ahead of the Nov. 7 election, credited "responsible economic management." Treasury expects inflation to return to the 1%-3% target band by Q2 2027, with annual GDP growth of 2.9%. ANZ economists called the forecasts "on the rosy side." Unemployment sits at a decade high.