Dairy price drop no concern for English

Minister of Finance Bill English. Photo / Jason Oxenham

The drop in dairy prices hasn't caused Finance Minister Bill English to rethink his confidence behind the forecast of the government reaching surplus next year.

Mr English told TV3's The Nation that while indications show the country's economic growth has peaked in the first part of this year, surplus would still be met.

"We're looking at a longer period of sustained 2.5 and 3 per cent growth," he said.

"I'm confident we can make it. The big drop in dairy prices has been further and faster than expected... that means 5 or 6 billion [dollars] not coming in the economy that we can't tax.
"[But,] we can handle it."

Mr English said while the markets "aren't looking really bubbly", New Zealand would get through.

"There's an under-lying sense of confidence, that's not all about whether the GDP number is big, it's more about our sense of our own capacity to handle what the world throws at us, and that's positive."

Dairy prices have nearly halved since the start of the year.

Before the election, Mr English forecast the government would reach a $297 million surplus next year.