6 Aug 2018

Softer housing could hurt govt finances - Treasury

6:54 pm on 6 August 2018

Treasury is warning the slump in business confidence and a cooling housing market could hit the government's books.

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Photo: nito500/123RF

In its July update on the economy, the agency said there was a risk that growth could be weaker than forecast in the Budget in May.

The economy is forecast to grow about 3 percent a year on average over the next four years, with surpluses rising to more than $7 billion in 2022.

Treasury warned that may now be at risk.

It pointed out the latest set of indicators painted a mixed picture of the economy with wages continuing to grow strongly while retail spending weakened.

It said the slump in business sentiment, a cooling housing market and fears of a trade war could knock the economy and the tax take.

If that happened, the government might be forced to curb its spending plans, Treasury said.

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