Treasury predicts anaemic GDP growth
The economy probably grew in the last two quarters but only just, according to the Treasury’s Monthly Economic Indicators report for June.
Treasury predicted March quarter GDP statistics, to be released this Thursday, would show a modest 0.3% increase, with negative impacts from the February 22 earthquake “largely confined to Canterbury.”
June quarter GDP growth would be more impressive but still nothing to write home about, the report said.
“We expect activity will rise further in the June quarter, but within the bounds of our forecast for GDP to grow less than 1% over the first two quarters of the year.
“Further impetus will come in the September quarter from the Rugby World Cup and from easing uncertainty around the Canterbury reconstruction programme.”
The report noted that although retail trade had started the year slowly, residential construction had fallen.
However, manufacturing and wholesaling firms began the year on an upward note, with wholesale trade sales rising 2.8% in the March quarter, the largest rise in four years.
Also, the National Bank Business Outlook (NBBO) survey results in May and June showed increasing levels of business confidence.
“Current levels of business optimism are consistent with accelerating growth over the year ahead,” Treasury said.
“Whether that is realised or not will be influenced by way the global recovery story develops and how events in Greece unfold.”