New Zealand Budget 2026 Preview

The Iran war has negatively impacted New Zealand's fiscal outlook, leading Westpac to forecast an $8bn deterioration in the operating balance and a $7-9bn increase in bond issuance.

Key Takeaways

• 1.The Iran war has shifted the fiscal outlook from improvement to deterioration, necessitating higher debt levels in the near term.
• 2.Westpac expects a cumulative OBEGALx deficit increase of approximately $8bn over the forecast period.
• 3.The four-year bond financing requirement is expected to rise by $7-9bn compared to previous forecasts.

Table of Contents

• A favourable starting point.
• Maintaining tight control of the controllable.
• Iran war fiscal transmission channels.
• So what does this mean for the operating balance?
• What about capex?
• The bottom line for bonds: $7-9bn additional issuance.
• What will the credit rating agencies think?
• Next update likely in October.

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