One economist’s immediate thought on Budget 2023 is that it could see a further rise in the Official Cash Rate.
Finance Minister Grant Robertson has released his sixth Budget today, with a focus on childcare, public housing and public transport, as well as rebuilding after Cyclone Gabrielle.
Speaking to On the Tiles, the NZ Herald’s politics podcast, live from the Budget lockup earlier today, Infometrics chief executive and principal economist Brad Olsen told Thomas Coughlan said that there is a big funding gap starting to emerge.
“You’re still seeing the government spend $9.4 billion more than they’d expected back in December last year over the next four years. At the same time, they’re able to take in $11 billion less in terms of revenue. That’s a $20 billion gap that’s starting to open up.
“I guess the worry is certainly when it comes to the government, they’re having to borrow more, all of that is coming at time when interest rates are higher, and the risk really is with those gaps, you might well have this government budget being more inflationary than we’d first thought.”
