Prime Minister John Key has intimated for the first time that the Treasury's half-year fiscal and economic update on Dec. 16 could change the forecast of a budget surplus to a small deficit, although he is optimistic that by the June 30 year-end a surplus will still be posted.
"Even if it was to show a small negative number, it doesn't mean that's what the number will be when the surplus, or deficit if that was to be the case, is finally determined for the 14/15 year," Key told his post-Cabinet press conference.
His comments follow last week's warning from Finance Minister Bill English that achieving the forecast surplus of $297 million in the update published before the Sept. 20 general election, itself a reduction from the $372 million surplus forecast in the budget in May, would be "a challenge."
"Historically, when you look at the HYEFU, there's been a lot of very wild fluctuations that have taken place," said Key. "We've had times when the HYEFU number has been billions of dollars out from the actual surplus or deficit at the end of the year. We think the numbers are looking OK."
Commenting on China's central bank cutting its official cash rate over the weekend to stimulate growth, Key said the Chinese president, Xi Xingping, remained "very confident of their growth rates" when they discussed the slowing Chinese economy during last week's three day state visit to New Zealand.
