2009 Consumer Spending Tipped To End NZ Recession
December 8th, 2008
In some positive news for us all in the lead up to Christmas, the New Zealand Institute of Economic Research says a pick-up in consumer spending will haul the economy out of recession in the first half of next year.
The Institute says the current recession will remain relatively shallow, but on the downside it says the subsequent recovery will be more gradual than previously forecast, largely because tighter credit and the lagged effect of prolonged high interest rates in recent months will slow growth in investment. Weaker growth among New Zealand’s trading partners will dampen net exports.
The forecaster is flying in the face of the doom and gloom from major bank economists, saying it expects “positive albeit modest” growth over the four quarters of 2009/10, enough to lift annual growth to 1.6% by March 2010 and return to trend rates of growth around 3.3% by March 2011.
It says, “the recovery in economic growth will be led by an upturn in private consumption in the first half of 2009, stimulated by lower petrol prices, lower interest rates, positive net immigration, wage inflation and the tax cuts in October this year and April next year.”
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