Robertson acknowledged that the rebound will be slower than expected.
“The forecast by most economists was that the supply chain constraints would ease and we would start to see things improve after the first quarter of 2022. Most economists are now pushing that back to the second quarter of 2022 and potentially beyond.
“I say this only to underscore the difficult environment in which we all operate and the fact that war is well and truly beyond our control, but something we obviously have to deal with.”
Robertson said the “benefit” was that he was “extremely confident in New Zealand’s resilience because that’s what we’ve shown through COVID”.
He pointed to the government’s announcement last week that 25 cents per liter of fuel will be cut from petrol taxes and public transport costs will be halved for three months to help ease the financial strain on families. .
“We did this because we recognized there was an immediate spike in the cost of living that was causing significant stress for households,” Robertson said.
Increases in the benefit, minimum wage and tax credits for families in April, as well as the payment for winter energy in May, should also help low-income households.
“We will continue to do these kinds of targeted measures,” Robertson said.
A costly pandemic
The impact of COVID-19 has been extremely costly for New Zealand. The government has taken on more than $120 billion in debt, according to the latest Treasury figures. Much of it, about $20 billion, paid for the wage subsidy program.
Net debt rose from 19% of GDP before the pandemic to 30.1% of GDP at the end of 2021. It is expected to peak at 40.1% of GDP in 2023. Net debt peaked at 54.8 % of GDP in 1992.
However, in comparison, the US and Britain face net debt of around 100% of GDP, so New Zealand is doing relatively well in terms of debt containment.
The government also collects a considerable amount of taxes. The Treasury’s March update shows tax receipts topped forecast by $1.4 billion at $59.7 billion, due to better-than-expected corporate profits and a weak job market solid.
Treasury Secretary Dr Caralee McLiesh said on Monday that “the strength of the government’s balance sheet before the COVID-19 pandemic has enabled the government to support the wellbeing of New Zealanders through an extraordinary shock.”
“New Zealand’s fiscal response has been large by international standards,” she said, but “this response has been key to minimizing unemployment, supporting rapid economic recovery and preventing longer-lasting damage to the economy. quality of life”.
The Treasury considers that net debt “continues to remain within prudent levels”.