![Treasury officials say New Zealand will tame inflation in 2024 but a budget surplus is years away. (Lukas Coch/AAP PHOTOS) Treasury officials say New Zealand will tame inflation in 2024 but a budget surplus is years away. (Lukas Coch/AAP PHOTOS)](/images/transform/v1/crop/frm/silverstone-feed-data/dd9b3e23-3c32-4afe-8774-c5b99b4c759d.jpg/r0_0_800_600_w1200_h678_fmax.jpg)
Already in recession, New Zealand's fiscal woes will extend for another three years with a worsening economy pushing back a return to surplus to 2027/28.
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Treasury released its latest economic forecasts on Thursday as the right-leaning coalition government handed down its first budget.
The headline figure was a deficit of $NZ11.1 billion ($A10.3 billion), almost $NZ2 billion ($A1.8 billion) larger than projected in December's mid-year projections, and booking a fifth consecutive deficit.
The updated Treasury guidance shows that streak will reach eight years before a tiny $NZ1.5 billion ($A1.4 billion) surplus is posted in 2027/28.
New Zealand last posted a surplus in 2019/20, before the Labour government's pandemic spending plunged the books into deficit.
Finance Minister Nicola Willis linked that spending to New Zealand's inflation challenge.
"Big government spending has fulled inflation and caused a significant deterioration in New Zealand's fiscal position," she said.
"New Zealand has been borrowing to pay for the groceries."
Ms Willis has pledged to be a lesser-spending finance minister, giving herself a fresh operating allowance of $NZ3.5 billion ($A3.2 billion) each year of this parliamentary term.
She has pre-committed more than $NZ1 billion of that to health spending, meaning her new spending envelopes are much smaller than those of the Labour government.
Government debt will come in at $NZ86 billion ($A79 billion) this budget, peaking at $NZ114 billion ($A105 billion) in 2027.
The updated forecasts predict real GDP growth falling 0.2 per cent in 2023/24, confirming the shallow double-dip recession, with anaemic growth of 1.7 per cent tipped in the following financial year.
The upside to the tanking economy is a brighter inflation forecast than six months ago.
Inflation is now predicted back in the target band in the third quarter of calendar 2024, which is one quarter earlier than expected, and dropping to 2.5 per cent rather than 2.9 per cent by year's end.
"Ultimately the Reserve Bank is responsible for getting back to that inflation target, but we're doing our bit," Ms Willis said.
Unemployment is tipped to peak at 5.3 per cent at the end of 2024, but stay above 4.5 per cent for the next three years.
Australian Associated Press