The New Zealand government's 2012 budget is a "business as usual budget in difficult times," says BNZ Economist Stephen Toplis. He noted that it is a fiscally responsible budget as the government hasn't been tempted into a big spend to stimulate growth or buy support, but "it is also not a particularly aggressive contractionary budget that would drive the economy into the ground. He says that if the Treasury's growth forecasts pan out, then interest rates may have to go even higher than it is forecasting in its Budget Economic and Fiscal Update. Treasury is forecasting that the Reserve Bank of New Zealand will begin raising interest rates in early 2013.
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