An analysis of the accuracy of the Treasury's macroeconomic and tax forecasts.
Nominal GDP growth
Nominal GDP measures the size of economic activity in New Zealand in current-dollar terms, i.e. the amount of economic activity including the effects of price inflation. Nominal GDP is important for the Crown's financial management because of its close relationship with tax revenue. The Treasury's forecasts of tax revenue are based on forecasts of nominal GDP and its components.
Average forecast errors at all forecast horizons have decreased since the last report, for the same reason as for the real GDP growth forecasts, i.e. large forecast errors through the 2009/10 recession were followed by relatively smaller forecast errors.
None of the mean errors were found to be significantly different from zero, indicating that there was not enough evidence to conclude that the forecasts were biased at any forecast horizon.