|NZ expects lower growth
May 7 Australia Financial Review
New Zealand would cut its economic growth forecast to below the present 2.5 per cent figure when it unveiled the annual budget, Finance Minister Michael Cullen said yesterday.
The growth forecast for the year to March 2004 would be "somewhat lower" than the present prediction but "rather higher" than 1.5 per cent, Mr Cullen said.
This is the second time since February that the government's growth projections have been cut. Growth is now expected to fall to less than half the 4.4 per cent recorded in calendar year 2002.
"It's well down on the experience of last year, as you would expect given all the circumstances leading into this budget ... the effect of the [stronger New Zealand] dollar, international uncertainty, drought, SARS, dry winter prospect," Dr Cullen said. "All of those things are clearly going to impact quite strongly on growth for the coming year but are seen very much as temporary phenomena with growth lifting again after that."
The government was considering a big package of tax rebates in next Thursday's budget for low income families to be introduced from July 2004, Dr Cullen said.
The package would be worth $NZ400 million ($360 million) to $NZ500 million he said, but a final decision would depend on the economic situation. There might be more family assistance "if over the next year we seem to be tracking roughly [on forecast]".
The surplus is expected to fall to about $NZ1.3 billion for the fiscal year ending June 30, 2003.