New Zealand will report "significantly slower" economic growth for the next few years when it releases a pre-Budget update in two weeks' time, Finance Minister Nicola Willis said on Friday, as slower productivity growth hampers the country's economy.
New Zealand's economy unexpectedly contracted in the third quarter and significant downward revisions were made to economic growth in earlier quarters, leading the market to pull back on bets of further interest rate hikes next year.
That, combined with recent data continuing to be weaker than forecast, has led Treasury officials to reassess growth projections for the economy, Willis said.
"The numbers haven’t been finalised, but I know enough to say they won’t make happy reading," Willis said, according to a copy of a speech to business leaders in Auckland on Friday.
"Treasury is now warning me that growth over the next few years is likely to be significantly slower than it had previously thought."
In December, New Zealand's Treasury forecast real annual GDP growth of 1.5% for the fiscal years ending June 2024 and 2025.
The weaker growth projections would not lead to cuts to government investment, Willis said.
Instead, the government plans to promote growth in several sectors, including space and biomedical engineering, alongside the country's traditional strengths of farming, fishing and tourism.
"With low-growth forecasts bearing down on New Zealand, now, more than ever, we must double-down on the drive for real economic growth," she said.
New Zealand will publish a Budget Policy Statement in two weeks' time, ahead of a Budget due on May 30.
