New Zealand’s economy continued to grow at a moderate rate, in part reflecting the effects of the recent drought and inflation. The macroeconomic policy has been framed to absorb adverse shocks with flexible exchange rates to serve as buffer. The planned pace of deficit reduction is balanced between sustaining aggregate demand and limiting public debt growth. Recent stress tests also showed that major banks could withstand a sizable shock to output, terms of trade, rising unemployment, and a fall in property prices.

Abstract

New Zealand’s economy continued to grow at a moderate rate, in part reflecting the effects of the recent drought and inflation. The macroeconomic policy has been framed to absorb adverse shocks with flexible exchange rates to serve as buffer. The planned pace of deficit reduction is balanced between sustaining aggregate demand and limiting public debt growth. Recent stress tests also showed that major banks could withstand a sizable shock to output, terms of trade, rising unemployment, and a fall in property prices.

Recent Developments

1. Output. Growth appears to have strengthened in the last months of 2012 and is estimated at 2½ percent for the year, as subdued household consumption and business investment and budget deficit reduction have been offset by strong agriculture production and continued expansion in the construction sector. Earthquake related reconstruction is gathering pace.1 Weather helped boost agricultural exports in 2012, while service exports were weighed down by the persistently strong exchange rate, brought about in part by the easing of global monetary conditions and more recently capital inflows related to a recovery in global risk appetite.

2. Inflation. Inflation remains subdued, with the exchange rate dampening tradable price inflation. Wage pressures are contained and by a range of measures the labor market remains soft. However pressures have emerged in the housing market, notably in Auckland where supply bottlenecks persist and in Christchurch where construction cost inflation has accelerated (figure). These two cities account for more than half of the housing wealth in New Zealand. Prices outside of these cities have been stable.

uA01fig01

House Price Inflation

(Annual)

Citation: IMF Staff Country Reports 2013, 117; 10.5089/9781484308837.002.A001

Source: RBNZ

3. Monetary policy. The Reserve Bank of New Zealand (RBNZ) has kept the policy rate at 2½ percent for two years (figure) given uncertainty over the global outlook, soft domestic demand, benign inflationary expectations, and the strong New Zealand dollar. Favorable offshore borrowing conditions have reduced banks’ funding costs and contributed to a further lowering of lending rates.

uA01fig02

OCR and Selected Interest Rates

(In percent)

Citation: IMF Staff Country Reports 2013, 117; 10.5089/9781484308837.002.A001

Source: RBNZ

4. Fiscal developments. As a consequence of the crisis and two large earthquakes, net government debt grew from 5½ percent of GDP in 2008 to 20 percent in 2011. The government has since established a medium term deficit reduction plan which would reduce the structural budget deficit by about 6 percent of GDP over four years, mainly through spending restraint.

5. External sector. The current account deficit in 2012 widened somewhat to 5 percent of GDP, reflecting some terms of trade losses, although it is well below the 8 percent level in 2005-08. Net external liabilities remain high at 72 percent of GDP at end-2012.

Outlook and Risks

6. Near-term outlook. The growth forecast for this year, currently at 2¼ percent, is subject to uncertainty. An increase in construction activity is offset by headwinds from budget deficit reduction, the strong dollar, and the recent severe drought, but at this stage the drought’s impact on growth is difficult to project and could require changes to the outlook. Over the medium term, output growth should peak at 2¾-3 percent as reconstruction spending increases further (figure) before converging to a trend rate of about 2½ percent. Underlying inflation is expected to increase but remain modest.

uA01fig03

Earthquake related investment (2012-19)

(In percent of GDP)

Citation: IMF Staff Country Reports 2013, 117; 10.5089/9781484308837.002.A001

Source: Authorities estimates

7. External risks. Although these risks have recently receded somewhat, potential weaknesses in the global economy and a possible upheaval in the global financial system still pose risks to both the current and the financial accounts.2 The main channels are:

  • Declining export demand causing a worsening of terms of trade. A global slowdown would hit commodity prices and New Zealand’s terms of trade, although in the past declines in commodity prices have often been offset by a weakening of the exchange rate (figure), buffering the impact on the economy.

  • Increased cost of external funding and rollover risks. Banks continue to rely heavily on offshore wholesale funding and a worsening of global financial conditions would raise funding costs.3 Moreover, some of banks’ total liabilities are short term external borrowings, leaving them exposed to the tail risk of a temporary shutdown of global funding markets. Banks are now less vulnerable than during the market disruption in late-2008, as the share of retail deposits and the average maturity of bank liabilities have been steadily increasing over the last two years and the source of funding is diversified across regions and products. Overall, with banks taking advantage of the relative calm in global markets to pre-finance their upcoming funding needs at relatively low borrowing rates, the likelihood and potential impact of a shutdown in offshore funding markets has declined in recent months.

uA01fig04

New Zealand: NEER and Commodity Price Index

Citation: IMF Staff Country Reports 2013, 117; 10.5089/9781484308837.002.A001

8. Housing sector risks. Household credit growth, housing market turnover, and house price inflation have all recently picked up, particularly in Auckland where supply bottlenecks persist, and prices remain elevated by most measures of affordability.4 Recent developments also suggest some easing of mortgage lending standards. In these circumstances there is an emerging risk that sustained rapid price growth could give rise to expectations-driven, self-reinforcing demand dynamics and price overshooting. A shock to household incomes or to borrowing costs could cause a sudden price correction, reducing consumer confidence as a large share of wealth is in housing, worsening banks’ balance sheets, and impacting overall economic activity. There are some mitigating factors, with a declining ratio of household debt to disposable income and low concentration of debt among low-income households likely limiting mortgage defaults and the impact of house price declines on the banks’ balance sheets (figures).

uA01fig05

Household Debt to Disposable Income

(In percent)

Citation: IMF Staff Country Reports 2013, 117; 10.5089/9781484308837.002.A001

Sources: RBA; RBNZ; Haver; and IMF staff calculations.
uA01fig06

Distribution of Household Debt by Income Quintiles

(In percent of total, 2007)

Citation: IMF Staff Country Reports 2013, 117; 10.5089/9781484308837.002.A001

Source: RBNZ

9. Possible outward spillovers. Spillovers from potential problems in New Zealand are limited by its small size but could potentially affect Australia. This is largely because of the Australian banks’ ownerships of most of the New Zealand banking system and the geographic and economic similarities of the two economies—both are commodity exporters with a generously priced housing sector involving significant bank exposures. However, these effects are mitigated by the fact that their direct credit exposure to New Zealand is fairly limited and recent stress tests suggest that the Australian banks are relatively resilient to external shocks.

New Zealand: Risk Assessment Matrix

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10. Tail risks and downside scenarios. Many of the above risks are closely linked, and the importance of agricultural sector exports to New Zealand’s near-term outlook makes the country vulnerable if a downside global scenario materializes. A combination of external shocks such as international financial turmoil and a slowdown in China and Australia could trigger a sudden decline in house and farm prices. This could in turn weaken consumer demand and negatively affect banks’ balance sheets and their willingness to lend. The downside macroeconomic impact in this scenario where shocks compound each other could be large. 5

11. Authorities’ views. The authorities shared staff’s assessment of the economic outlook and risks. They noted that earthquake reconstruction would be a major driver of demand for many years but the precise timing and size of spending is still uncertain. They anticipate that the drought will have a sizeable negative effect on the growth outlook for this year. They are keenly aware that risks in the housing market, particularly for Auckland, have increased over the last year. They noted that the low level of residential construction activity in recent years has contributed to housing shortages, and that these shortages are unlikely to ease soon. They also see the recent decline in mortgage rates, reflecting banks’ lower funding costs, as contributing to demand. Adding to this, credit has become easier to obtain, with banks competing aggressively to gain market share. The RBNZ is watching for signs that perceived increases in household wealth will lead to lower household saving, putting pressure on aggregate demand and increasing households’ vulnerability to shocks such as increases in interest rates or unemployment.

Near-Term Macroeconomic Management

12. Monetary policy stance. Given below trend growth and low inflation, the current accommodative monetary policy stance is appropriate. However, monetary policy is facing a growing tension between maintaining inflation in the target band in a soft economy and preventing an acceleration in house price inflation which could threaten financial stability. Going forward, the stance may need to change if house price and credit expansion begin to fuel excessive consumption spending and inflationary pressures. The RBNZ’s credibility and the effective monetary transmission mechanism in New Zealand should allow for a nimble response should circumstances change.

13. Fiscal Policy. The deficit reduction plan underway would achieve a budget surplus by 2015. The 2013 deficit is expected to be about 2¾ percent of GDP.6 The plan relies mainly on expenditure restraint by reprioritizing spending from lower-value to higher-value activities and reducing Budget operating allowances; reducing the cost of existing policies; and driving efficiency gains. The government designed an ambitious reform of many welfare programs to improve their efficiency and reduce spending by almost 2½ percent of GDP in the next two years. The cuts in spending are broad based with an almost 1 percent of GDP reduction in superannuation, social security and welfare expenses, ¾ percent in health and 0.6 percent of GDP in education. Revenue is expected to increase by almost ½ percent of GDP from 2013 to 2015. Under this plan, net debt would peak at about 30 percent of GDP in 2015 and return to 20 percent of GDP by 2021. The government also plans to sell stakes in several state-owned enterprises over the next four years amounting to about 3 percent of GDP and to use the proceeds to fund capital spending.

14. Macroeconomic impact of fiscal policy. We regard the pace of deficit reduction as striking the right balance between sustaining aggregate demand and limiting public debt growth. The benefits of the plan are many. First, it withdraws fiscal stimulus at the right time by making room for the expected increases in private sector and earthquake-related reconstruction spending. Second, it has improved the macroeconomic policy mix by reducing pressure on monetary policy. Third, it creates fiscal space to help the country deal with aging and health care costs that are expected to increase over the long term and to cope with any negative shocks that may cause a sharp reduction in domestic economic activity or potential liabilities associated with the banking sector. Last, it could help raise national savings, reduce the current account deficit, and limit the increase in foreign liabilities.

15. Policy space to manage risks. The authorities have monetary and fiscal policy space to respond to near-term shocks, with monetary policy serving as the first line of defense. The RBNZ has scope to lower interest rates and loosen monetary conditions to help buffer against a downside scenario. As evident during the global financial crisis, the free-floating New Zealand dollar provides an additional cushion against external shocks, including disruptions to offshore funding and negative terms of trade shocks, with widespread hedging by banks and businesses insulating their balance sheets from fluctuations in the exchange rate. The authorities would be able to provide emergency liquidity support to banks which proved effective when wholesale markets shut down in the wake of the 2008 crisis. New Zealand’s modest public debt gives the authorities scope to delay their planned deficit reduction path in the event of a sharp deterioration in the economic outlook. To limit the risks in the housing market, the new macro-prudential tools under consideration (discussed in paragraph 22) could improve the RBNZ’s ability to guard against a loosening of bank lending standards that would contribute to an unsustainable acceleration in house price inflation. These measures are untested, however, and there are questions about how effective they will be given possibilities of evasion and arbitrage.

16. Authorities’ views. The RBNZ regards the currently accommodative monetary stance as consistent with keeping inflation in its targeted range of 1 to 3 percent. They agreed, however, that their flat interest rate outlook would need to be revisited if a housing-related credit boom added to underlying inflation pressures. To address housing risks, the RBNZ is currently consulting on a potential increase in bank capital requirements against high loan-to-value lending, and expects that the new macro-prudential policy framework could be used to increase resilience in the banking system against a future housing downturn while having a moderating influence on credit expansion to the housing sector. They also pointed to longer-term measures to address housing supply constraints, which could play an important role in containing price pressures and increasing affordability.

External Stability

17. Current account. New Zealand’s persistently large current account deficits appear to reflect structural savings – investment imbalances, with low household savings playing a key role (see Annex 3). The deficit is expected to widen this year despite relatively strong terms of trade as earthquake related reconstruction gathers pace. Meeting the country’s investment needs given low savings has required capital inflows motivated by higher domestic interest rates. The result has been a strong exchange rate over an extended number of years and a buildup of the country’s stock of net external debt (figure). Reducing pressure on the exchange rate and limiting current account deficits in a lasting way will therefore require addressing the reasons for low savings, rather than being the task of short-term macroeconomic management. The government’s Savings Working Group presented recommendations in February 2011, suggesting raising national saving by 2–3 percent of GDP primarily through an increase in public saving and tax policy changes. They include a further switch from income to consumption taxation over the medium term while maintaining the broad base of the GST, and indexing interest income and expenses at a standard rate for tax purposes that reflects the rate of inflation. Budget deficit reduction would also contribute to this end, as would further household balance sheet repair. In this regard much will depend on whether the post-crisis increase in the household savings rate represents a structural break from past behavior.

uA01fig07

Net External Liabilities

(In percent of annual GDP)

Citation: IMF Staff Country Reports 2013, 117; 10.5089/9781484308837.002.A001

Source: Statistics New Zealand.

18. Exchange rate assessment. Aside from these structural factors, there are a number of short-term factors contributing to the currently overvalued exchange rate, including a continuing gap between domestic and foreign interest rates and more recently, increased portfolio flows into New Zealand (Box 2). If global monetary conditions were to become less stimulatory, the exchange rate would likely depreciate over time, reducing the current account deficit over the medium term—in staff’s baseline scenario where the exchange rate depreciates by 10 percent over the next two years, perhaps the result of lower capital inflows and a tighter fiscal policy stance, the current account deficit would gradually decline to around 6 percent of GDP when the earthquake reconstruction comes off its peak. Stabilizing net foreign liabilities at around 80 percent of GDP would require a trade surplus of around 2 percent of GDP more than in the baseline scenario, which could be achieved through further adjustment to the exchange rate and/or a shift in public and private savings behavior. A worsening of the terms of trade would likely be accompanied by additional depreciation relative to the baseline scenario, which should help buffer the impact on the current account.

uA01fig08

Current Account Deficit and Net External Liabilities

(In % of GDP)

Citation: IMF Staff Country Reports 2013, 117; 10.5089/9781484308837.002.A001

Source: Staff projections.

19. Authorities’ views. The authorities agreed that the persistent strength of the New Zealand dollar is mainly the result of structural savings – investment imbalances, and not short-term monetary policy management. They recognize the long-standing risk posed by the country’s relatively large external debt position, and view the planned increase in public savings as the most effective policy action to reduce this risk. They noted the increase in household saving that had occurred in the past few years but agreed that there was some uncertainty about how much of the increase represented a structural shift. They emphasized the key role the integrity and credibility of the RBNZ’s monetary policy framework, including the free floating exchange rate, has played in delivering macroeconomic stability and enhancing the resilience of the New Zealand economy. They agreed that part of the currency’s current strength may dissipate with eventual tightening by major central banks, but underscored their concern that weak global growth and persistent European financial turmoil could delay this tightening for some time, adding to future current account deficits.

Exchange Rate Assessment1/

New Zealand’s real effective exchange rate remains elevated in 2012 despite some decline in commodity prices, reflecting strengthening of the nominal effective exchange rate. The relatively strong dollar continues to weigh on tradable sector competitiveness and limit demand for net exports. The current account deficit widened from 4 percent of GDP in 2011 to 5 percent in 2012.

Aside from the structural savings-investment imbalance that contributes to the persistently strong exchange rate (see Annex 3), there are a number of short-term factors associated with its current level, including the gap between domestic and foreign interest rates, the recovery in global risk appetite, and increased portfolio and official flows into New Zealand.

Model-based approaches, consistent with those of the authorities2/ suggest that New Zealand’s real exchange rate is 10-15 percent above the level that would be consistent with medium term fundamentals. The IMF’s amended real exchange rate regression approach attempts to identify the policy-related (both domestic and international) drivers of the deviation of each country’s real exchange rate from its fundamentals-based fitted value. Applied to New Zealand, this yields an estimate of 10 percent overvaluation. The unexplained residuals in the regression, i.e., the exchange rate gap not explained by medium term fundamentals and policy drivers, seem to be positively correlated with interest rate differentials and net portfolio inflows. These estimates are, however, subject to considerable uncertainty.

A second approach suggests that stabilizing net external liabilities at the 2011 level of around 80 percent of GDP (excluding reinsurances) would require the current account deficit falling to about 3¾ percent of GDP. Given the trade elasticities estimated by CGER, this would need the New Zealand dollar to be about 15 percent weaker than its current level.

uA01fig09

Effective Exchange Rates

(January 2000=100)

Citation: IMF Staff Country Reports 2013, 117; 10.5089/9781484308837.002.A001

uA01fig10

Equity and Bond Funds Net Inflows

($, million)

Citation: IMF Staff Country Reports 2013, 117; 10.5089/9781484308837.002.A001

Source: EPFR database.
uA01fig11

REER Regression Residual

(In percent)

Citation: IMF Staff Country Reports 2013, 117; 10.5089/9781484308837.002.A001

Source: Staff estimates based on the Pilot External Balance Assessment
1/ This box is based in part on preliminary results from the pilot External Balance Assessment (See http://www.imf.org/external/np/res/eba/data.htm).2/ Extending the Reserve Bank’s macroeconomic balance model of the exchange rate (RBNZ Analytical Note 2012/08).

Safeguarding Financial Sector Stability

20. Financial developments. New Zealand’s banking sector has strengthened in the aftermath of the global crisis (see Annex 1). Asset quality remains good, the ratio of nonperforming loans to total assets is low and continues to decline from its peak, and return-on-assets is in line with the pre-crisis average. Capital adequacy has improved and is well above the Basel III capital requirements which the RBNZ began to put in place in January. Banks have shifted toward more stable funding sources facilitated by a combination of strong deposit growth and slower credit growth. Reliance on offshore wholesale funding has been reduced and is of longer maturity, and deposits now meet around half of banks’ funding requirements. Nevertheless, vulnerabilities remain. The four major banks are systemic with broadly similar business models, and their reliance on wholesale offshore funding (as reflected in high loan-to-deposit ratios), although lower than pre-crisis levels, still represents a risk. Residential mortgages and agricultural lending account for a large part of banks’ assets, sectors which are vulnerable to price fluctuations and where leverage is still high. These are longstanding structural issues that will remain sources of risk over the medium term.

21. Capital requirements. The RBNZ’s conservative risk weights, capital eligibility, and deduction rules give New Zealand banks higher quality capital than their advanced country peers. At the same time, banking sector vulnerabilities should be assessed on an ongoing basis to minimize the risk that systemically important banks pose to the economy, taking into account the currently evolving international standards.

uA01fig12

Loan-to-Deposit Ratios in Selected Countries

(In percent; Feb 2013)

Citation: IMF Staff Country Reports 2013, 117; 10.5089/9781484308837.002.A001

Source: CEIC.

22. Revisions to the macro-prudential framework. The announcement of a number of macro-prudential tools (available to use in circumstances such as periods of excessive credit growth) sends a strong signal to the market of the authorities’ intention to safeguard financial system stability. The new tools are expected to include countercyclical capital buffers, overlays to sectoral capital requirements, cyclical variation in the Core Funding Ratio, and loan-to-value restrictions. The intention is to have the RBNZ apply these measures after consultation with the Minister of Finance, and a memorandum of understanding outlining the process will be signed soon. The framework is expected to be in place by the second half of the year. As noted in paragraph 15, these new measures could help dampen credit cycles, strengthen macroeconomic management, and guard against an acceleration of house price inflation.

23. Financial sector resilience. Consistent with staff simulations, the authorities’ recent stress tests, based on both single and combined shocks, show that the major banks would be able to withstand a sizeable shock to output, terms of trade, commodity prices, rising unemployment, and a fall in house, farm, and commercial property prices.7 However, a severe shock that combines an adverse global scenario with sectoral downturns would make major inroads into these banks’ capital buffers requiring recapitalization efforts. Banks would also likely require RBNZ help to withstand an extreme funding shock.

24. Authorities’ views. The authorities emphasized their conservative approach to bank regulation and supervision. Given this together with New Zealand banks’ high capital quality, they did not see a need at present to raise the minimum capital requirements for the four systemically important banks above the Basel III requirements. The authorities agreed with staff that the new set of macro-prudential tools should be viewed as a complement to and not substitute for macroeconomic and micro-prudential measures. They stressed their intention to use these tools judiciously, and as experience with such instruments is limited, with caution, with the primary objective of limiting the periodic buildup of system-wide risk. Measures have been taken to further strengthen the AML/CFT regime, particularly to ensure adequate transparency of legal persons and arrangements.

Staff Appraisal

25. Outlook and risks. Growth this year is likely to remain modest, with an increase in construction activity being offset by headwinds from budget deficit reduction, the strong dollar, and the recent severe drought. Spare capacity and a soft labor market will contain inflation pressures in the near term. Rising house prices, which are already elevated by standard metrics, are a growing concern, as they could lead to an increase in debt-financed household spending which would put pressure on aggregated demand, and increase the risk of an abrupt price correction. Other threats include the financial and economic fallout from an intensification of European sovereign debt problems and a slowdown in China, Australia, and other parts of Asia.

26. Monetary policy. The current accommodative monetary policy stance is appropriate, but may need to change if house price and credit expansion begin to fuel excessive consumption spending and inflationary pressures. The RBNZ’s credibility and the effective monetary transmission mechanism in New Zealand should allow for a nimble response should circumstances change.

27. Fiscal policy. The planned pace of deficit reduction strikes the right balance between sustaining aggregate demand and limiting public debt growth. It withdraws fiscal stimulus at the right time by making room for the expected increases in private sector and earthquake-related reconstruction spending, it has improved the macroeconomic policy mix by reducing pressure on monetary policy, it creates fiscal space to help deal with future spending pressures and cope with any negative shocks, and could help raise national savings. New Zealand’s relatively modest public debt gives the authorities some scope to delay their planned deficit reduction path in the event of a sharp deterioration in the economic outlook.

28. External vulnerabilities and the exchange rate. New Zealand’s large net liabilities are a longstanding source of external risk, and reflect historically low household savings rates. Given a structural savings-investment imbalance, reducing pressure on the exchange rate and limiting current account deficits in a lasting way will require addressing the reasons for low savings, rather than being the task of short-term macroeconomic management. Aside from these structural factors, there are a number of short-term factors contributing to the currently overvalued exchange rate, including a continuing gap between domestic and foreign interest rates and more recently, increased portfolio flows into New Zealand. If global monetary conditions were to become less stimulatory, the exchange rate would likely depreciate over time, reducing the current account deficit over the medium term.

29. Financial sector issues. Banks remain sound, and recent stress tests show that the major banks would be able to withstand a sizeable shock to output, terms of trade, rising unemployment, and a fall in property prices. The banks remain exposed, however, to highly leveraged households and farmers and rollover risks associated with large short-term offshore funding needs. To limit the risks in the housing market, the new macro-prudential tools under consideration could improve the RBNZ’s ability to guard against a loosening of bank lending standards that would contribute to an unsustainable acceleration in house price inflation. These tools should be viewed as a complement to macroeconomic and micro-prudential measures. They should be used infrequently, and as experience with such instruments is limited, with caution, with the primary objective of limiting the periodic buildup of system-wide risk.

30. Staff recommends that the next Article IV consultation be held on the standard 12-month cycle.

Figure 1.
Figure 1.

A Modest Growth Rate

Citation: IMF Staff Country Reports 2013, 117; 10.5089/9781484308837.002.A001

Sources: Statistics New Zealand; Reserve Bank of New Zealand; ANZ; Haver Analytics; World Economic Outlook; and Fund staff estimates.
Figure 2.
Figure 2.

An Accommodative Monetary Stance

Citation: IMF Staff Country Reports 2013, 117; 10.5089/9781484308837.002.A001

Sources: Reserve Bank of New Zealand; Statistics New Zealand; New Zealand Institute of Economic Research; Haver Analytics database; and Fund staff estimates.
Figure 3.
Figure 3.

The Government’s Deficit Reduction Plan

Citation: IMF Staff Country Reports 2013, 117; 10.5089/9781484308837.002.A001

Sources: The New Zealand Treasury; Statistics New Zealand; World Economic Outlook database; and IMF staff calculations and projections.
Figure 4.
Figure 4.

Banking Sector Developments

Citation: IMF Staff Country Reports 2013, 117; 10.5089/9781484308837.002.A001

Sources: Reserve Bank of New Zealand; Statistics New Zealand; Bankscope; APRA; Haver Analytics database; and IMF staff estimates.
Table 1.

New Zealand: Selected Economic and Financial Indicators, 2008–13

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Sources: Data provided by the New Zealand authorities; and IMF staff estimates and projections.

Contribution in percent of GDP.

Based on national accounts data.

Fiscal years ending June 30.

IMF Information Notice System index (2000 = 100).

Table 2a.

New Zealand: Statement of Operations of Budgetary Central Government, 2008/09–2013/14 1/

(In billions of New Zealand dollars)

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Source: New Zealand Treasury. The data on cyclically adjusted balance, structural balance and structural residual cash balance in this table are based on the IMF’s Staff calculations and methodology.

Fiscal year ending June 30. Includes core Crown (excluding RBNZ) and Crown entities.

Includes use of goods and services.

Includes currency, deposits and equities.

Excluding Reserve Bank Settlement cash.

Excluding NZ Superannuation Fund and advances.

Includes financial assets of NZ Superannuation Fund.

Table 2b.

New Zealand: Statement of Operations of Budgetary Central Government, 2008/09–2013/14 1/

(In percentage of GDP)

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Source: New Zealand Treasury. The data on cyclically adjusted balance, structural balance and structural residual cash balance in this table are based on the IMF’s Staff calculations and methodology.

Fiscal year ending June 30. Includes core Crown (excluding RBNZ) and Crown entities.

Includes use of goods and services.

Includes currency, deposits and equities.

Excluding Reserve Bank Settlement cash.

Excluding NZ Superannuation Fund and advances.

Includes financial assets of NZ Superannuation Fund.

Table 2c.

New Zealand: Central Government Balance Sheet, 2008/09–2013/14

(In billions of New Zealand dollars)

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Source: New Zealand Treasury. The data in this table are based on the IMF’s Staff calculations, methodology, and coverage for the central government.
Table 3.

New Zealand: Balance of Payments and External Debt, 2008–12

(In percent of GDP)

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Sources: Data provided by the New Zealand authorities; and IMF staff estimates and projections.

The large net errors and omissions in 2008 and 2009 mainly reflect financial account data issues, as extreme volatility i exchange rates and market prices during that period made it difficult to separate out valuation effects from financial account transaction.

IIP balance sheet positions arise from transactions and valuation changes. The large net errors and omissions in 2008-do not lead to large under-estimation of net foreign liabilities.

Table 4.

New Zealand: Balance of Payments and External Debt, 2008–12

(In billions of U.S. dollars)

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Sources: Data provided by the New Zealand authorities; and IMF staff estimates and projections.

The large net errors and omissions in 2008 and 2009 mainly reflect financial account data issues, as extreme volatility in exchange rates and market prices during that period made it difficult to separate out valuation effects from financial account transaction.

IIP balance sheet positions arise from transactions and valuation changes. The large net errors and omissions in 2008-09 do not lead to large under-estimation of net foreign liabilities.

Table 5.

New Zealand: Medium-Term Scenario, 2010–18

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Sources: Data provided by the New Zealand authorities; and IMF staff estimates and projections.

Contribution in percent of GDP.

Converted from March year basis for historical data. Public saving covers general government.

Fiscal years ending June 30.

Data for end-December.