New Zealand says government books better than expected

FILE PHOTO: Pedestrians walk near the main entrance to the Reserve Bank of New Zealand located in central Wellington, New Zealand, July 3, 2017. REUTERS/David Gray

WELLINGTON (Reuters) - New Zealand’s Finance Minister said on Tuesday that the economy was in a better shape than expected, after the treasury reported that the government’s deficit was almost half of what was forecast, while tax revenue was higher.

The treasury said in the three months to Sept. 30 the government’s deficit was at NZ$3.2 billion ($2.2 billion), $3.3 billion less than the deficit forecast in the pre-election economic and fiscal update (PREFU 2020) published on Sept. 16.

Tax revenue was $2.1 billion above the previous forecast as consumers were spending more domestically.

“The Government’s decision that the best economic response to the COVID-19 pandemic was a strong health response has proved time and again to be the right one,” Grant Robertson said in a statement.

Net debt was 30.5% of the GDP, also better than the PREFU forecast of 31.7% of GDP. This compares to the average for advanced economies before COVID-19 of about 80%, Robertson said.

With 25 coronavirus-related deaths and fewer than 2,000 cases, New Zealand is one of the least affected countries in the world from the pandemic.

It has virtually eliminated the community spread of the virus using tough lockdown measures that forced almost everyone to stay at home and businesses to remain shut for weeks.

Reporting by Praveen Menon; Editing by Sonya Hepinstall