NZ in strong position to face global economic turbulenceDeputy Prime Minister Finance
New Zealand is in a strong position to handle the increasing global economic turbulence highlighted by the IMF’s latest forecasts released today.
The IMF’s October forecasts show global growth slowing further to 2.7 percent in 2023 from 3.2 percent this year, for global inflation to peak near 9 percent this year and for growth in major economies the US, EU and China to stall. More than a third of the global economy is projected to contract this year or next.
“New Zealand faces this period of global turmoil with an economy that is bigger than before COVID, near record-low unemployment and world-leading government books with low debt and a smaller deficit than expected. We’ve come out of the emergency COVID response in a stronger position than after the global financial crisis, and our reconnection strategy is bringing in tourists and new opportunities for our exporters,” Grant Robertson said.
“These strengths mean we can withstand the global downturn, while being able to keep debt under control and target investments into what matters most to New Zealanders, like building hospitals, classrooms and addressing the housing shortage.
“While we can be optimistic about New Zealand’s position and the opportunities for our economy, we also need to remain cautious about how we secure our economy against this global turmoil. Taking on more debt to fund tax cuts for the wealthiest New Zealanders would undermine this position, as we’ve seen recently in the UK.
“The IMF recommended that for countries where the pandemic is receding, now is the time to rebuild fiscal buffers. It also recommended that fiscal policy to support people through the global cost of living spike should be temporary and targeted at the most vulnerable people.
“The report also highlights the importance of New Zealand’s shift towards energy independence through our climate change investments, with the October outlook warning that the energy crisis in Europe is not going to be a transitory shock,” Grant Robertson said.
Grant Robertson will attend the IMF’s annual meetings this week in Washington. His schedule includes meetings with US Federal Reserve Chair Jerome Powell and finance minister counterparts to discuss the global economic situation.