-John Key, Prime Minister
Australian policymakers and politics are not univocal and each is pushing the currency in the different direction. The situation in New Zealand is less complex, as the government unveiled its first budget surplus in seven years, easing pressure on the central bank and providing more room for a manoeuvre. The nation's Finance Minister Bill English pointed out that the upcoming budget will allow additional support for Kiwis without further rate hike that n they would otherwise be, by the government being prudent with spending. The budget will reach a surplus of $372 million in 2014-15, growing to $1.3 billion a year later and then reaching $3.5 billion in the period between 2017 and 2018. Additionally, government debt will ease to 20% by 2019/20 and will be falling during the whole period till this date. This year's budget comes with a key spending package of $500 million for the nation's families and children.
At the same time, the government warned about the existing risks. New Zealand account for about 30% of the world's dairy exports, and has benefited from a surge in demand in Asian countries. Dairy prices, however, have dropped more than 20% since mid-February. Furthermore, the rebuild in Christchurch is expected to slow. Therefore, Treasury's projections are built on strong trade sector, even though global risks still remains skewed to the downside, and potentially can become a drag on exporters.
© Dukascopy Bank SA