Bad news for NZ is good news for bond investors: Nikko

The government's debt may be higher than previously forecast and it may have to issue more bonds.

McDonald said NZ had one of the world's fastest and largest fiscal response to covid, as well as “QE on steroids,” and that means the NZ economy is suffering more than other countries from covid's aftermath.

The Reserve Bank's QE, known as the large-scale asset programme (LSAP) and another name for money printing, reached about $55 billion before it ceased in July 2021 and it also spent another $19 billion on the funding for lending programme (FLP), a scheme for funnelling cheap three-year money to banks, which ended in December 2021.

The result has been that four of the last five quarters has seen negative economic growth and the outlook for the next year “is modest at best,” McDonald said.