New Zealand plans significant government spending cuts

New Zealand's economy has shown signs of recovery, with a 0.7% increase in gross domestic product (GDP) for the December 2024 quarter. This growth exceeded expectations, which ranged from 0.2% to 0.5%. Finance Minister Nicola Willis believes this indicates more opportunities, jobs, and higher incomes for New Zealanders. Despite the positive economic news, Willis is preparing for significant government budget cuts. She has been working on a plan aimed at reducing government spending in the upcoming Budget. The aim is to address the financial challenges stemming from the large amounts of money borrowed during the COVID-19 pandemic. New Zealand's debt-to-GDP ratio has doubled as a result of this borrowing. Currently, the government spends more on servicing this debt than on primary and secondary education combined with the Ministry of Justice. The situation is worsened by rising costs linked to Donald Trump’s trade war, which is further increasing the burden of debt repayments.