The release of its Pre-Election Fiscal and Economic Update (PREFU) on Wednesday confirmed a dire outlook for the government's books and New Zealand's economy.

Finance Minister Grant Robertson can at least point to a revised unemployment peak of just 7.8 per cent, in March 2022, well below previous joblessness predictions.

However whoever wins NZ's October 17 election will be governing in a sea of red, with Treasury forecasting eye-watering debt and deficits.

New Zealand, which enjoyed better growth than Australia, the UK, Europe, Canada and Japan last year, will see its economy contract 7.2 per cent in 2020 according to the PREFU forecast.

That is likely to be a deeper fall than Australia, owing to its 51-day lockdown in autumn.

Treasury projects New Zealand will rebound stronger in 2021 and 2022, rising 4.9 per cent and 3.6 per cent.

The result of an economy in reverse is the end of Mr Robertson's beloved surplus.

PREFU showing a 2019/20 deficit of $NZ23.4 billion ($A21.5 billion), which grows to $NZ31.7 billion next year.

In four years of forecasts and a further 10 years of predictions, it does not show a return to black.

Jacinda Ardern's government has budgeted $NZ58 billion on COVID-19 projects, including wage subsidies, business loan schemes and stimulus spending.

Of that, $NZ14 billion remains set aside for a rainy day.

The additional spending, combined with the government's rejection of austerity, will see government debt skyrocket, peaking at $NZ201 billion in 2024 or 55.3 per cent of GDP.

"The global pandemic is having an unprecedented impact, not just on New Zealand, but the whole world," Mr Robertson said.

"The good news is that we as a country are looking better right now than most others.

"I do note in these numbers our unemployment is forecast to be lower than where Australia is.

"I do note that our debt for this year will be lower than Australia's is and I do note that our growth going out to 2021/22 will be better than Australia is."

Opposition leader Judith Collins pledged an improved fiscal plan this week, saying Mr Robertson shouldn't try to sugar-coat the dour situation.

"Treasury predicts 100,000 more New Zealanders will lose their jobs in the next two years," she said, referring to the jump between the current jobless rate of 4.0 per cent to the predicted high of 7.8 per cent.

"We are in the worst recession in living memory."

A further dose of bad news will be confirmed on Thursday, when Stats NZ will reveal the GDP drop for the June quarter, which included NZ's harsh lockdown.

Treasury estimated this at 16 per cent, saying it would "far exceed previous records" for a quarter.

It would also fufill the technical definition of recession.

Australian Associated Press