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Economists revise outlook – upwards

The country’s economists have cheered up a bit.

The latest New Zealand Institute of Economic Research survey of economic forecasts show a slight up-tick in the outlook by economic forecasters, despite the overseas economic turbulence of the past six weeks.

The current outlook, averaged across the 11 private and public sector forecasters who follow the New Zealand economy, is for economic growth to accelerate from 1.5% in the year ending March 2011 to 2.6% in 2012 and 3.7% in 2013.

Inflation is forecast to average 2.7% over the next three years – uncomfortably near the top of the Reserve Bank’s 1-3% target range.

The average forecast is also for the New Zealand dollar to stay higher for longer and although demand for New Zealand’s main commodities is expected to keep exports resilient, the income from this will be more muted than it might otherwise be.

The Christchurch rebuild is expected to play a major part in economic growth over the period – and also, indirectly, in the relatively high inflation expected.

“The recovery is being supported by growth in residential construction, led by the Canterbury rebuild,” said NZIER principal economist Shamubeel Eaqub.

“Without that, growth averages 2.7%. Household spending growth will be steady, rather than accelerate, and public sector spending will ease. Exports will grow less strongly, due to weaker global growth and a higher New Zealand dollar.”

More by Rob Hosking

Comments and questions

Not sure what the economists are basing their optimism on. A lot to be very worried about at the moment - high dollar killing exporters, trading partner economies under increasing pressure, very little commercial lending going on a sign of very little private sector capital investment occurring, regulatory handbrakes slowing the economy with many uninetnded outcomes, inefficient civil servants and local authorities, unions out of touch with business realities, and a debt burden which doesnt look too far from Ireland's. If they think ChCh rebuild is the catalyst then they need to understand how the inefficient EQC payments system is holding up this work and is likely to cause further skills shortages for the rebuild. Hmm think the economists might have this one wrong.

on the nail

If this is true - remind me again why interest rates are set at levels designed to cope with economic meltdown?

and the re-build won't get seriously underway until the shaking stops - regardless of hand-wringing and angst over timelines, skill shortages, and urgency.

Who would re-insurance anything whilst the ground still moves?

Labour is going to set up a new insurance commissioner. That will stop the ground moving and all will be well.

People trying to justifying there salaries

If you're going to try and insult someone, please at least put together a grammatically correct sentence .

Some are still on a four day week, and the recovery hasn't reached them as yet

Remind me again why economists predict instead of review?

So the only way to get economic growth is to destroy our cities and then rebuild them?????????

So by the time you pay tax on the interest you earn on the money you dont put into residential property the inflation means you have gone backwards.

Yeh real incentive to save for your retirement NOT

These guys have far more facts than most of us - personally I think that they are right on the money. I guess there will always be that doom and gloom, glass half empty crowd who think it's their role in life to bring us all down to their level... but why not celebrate - isn't it great that NZ's finally on the way back to the top of the OECD!

and your view on now "probable" economic stagnation as a function of the euro debt "crisis"/US print-athon combo as reported by most "major" economists? or shall we just pretend that's not happening and, instead, celebrate away NZ's sovereignty in a gaggle of self-aggrandising euphoric ignorance?

come on people.

if you are a business owner, you have to admit that things are getting easier after the big 2008-2009 slump.

any sensible business owner would be looking off shore and over the horizon and would be taking stock of the economic tsunami rolling this way.

And the worrying thing is that as far as I can remember economists always get it wrong, ALWAYS.

So what is it likely to be they are wrong on the low side (NZ the new economic miracle) or they are wrong on the high side (what happens in NZ is influenced by the rest of the world).

Place your bets, TAB opens shortly.

Don't bother looking to NZ economists or NZ stats, we have no influence in our own problems. Look to Euro, US and Chinese issues, that is all you need to know to see where the economy is going to be for the next few years.

Bollard is nothing if not reliable!
Unfortunately his glass is always half empty rather than half full
of course he is under orders from his political masters to keep it so.
Perhaps one of these days a little forward looking optimism will penetrate his gloom and we can at long last start on the road to building savings and thus some domestic investment capital.
until we do this we will continue our slide to economic oblivion.
But this will require a dramatic change in policy and an INCREASE in interest rates which is obviously outside the thinking of those who rule.