FILE PHOTO – Containers are stacked in a port terminal with residential houses on a hill behind in Wellington, New Zealand, July 2, 2017. REUTERS / David Gray / File Photo

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WELLINGTON, Dec. 15 (Reuters) – New Zealand will return to a budget surplus sooner than expected and take on less debt as the economy has been more resilient than expected, the government said on Wednesday.

The Treasury Department has forecast the deficit to widen to NZ $ 20.8 billion ($ 14.01 billion) in the current year, but the books will return to a surplus in 2023/24, about 2 years before the previous forecast.

“The New Zealand economy has performed well since the start of 2021, although this strength has been tested by the arrival of Delta,” Finance Minister Grant Robertson told a press conference .

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Gross domestic product (GDP) is expected to fall by around 6% in the September quarter, due to the economic impact of the Delta epidemic. But it will gradually recover over the quarters of December and March 2022, increasing by 3.7% and 3.8% respectively, according to the Treasury’s semi-annual economic and budgetary update (HYEFU). GDP will reach 4.9% by 2023/24.

Net debt will be higher at 37.6% of GDP in 2021/22 compared to 34.0% expected in May. Net debt peaks at 40.1% in 2022/23 before falling back to 30.2% at the end of the forecast period.

New Zealand has enforced some of the world’s most stringent pandemic and border restrictions, which has limited the spread of COVID-19 and helped its economy rebound faster than many other countries.

The South Pacific nation plans to gradually open its borders starting in January next year.

($ 1 = NZ $ 1.4843)

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Report by Praveen Menon

Our Standards: Thomson Reuters Trust Principles.

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