Subdued recovery to continue - Treasury
The main issues looking ahead:
Hot Topic
EARNINGS
It's a beer, or maybe even a watered down shandy, of an economic recovery, rather than a champagne party.
The Treasury's latest monthly economic update says New Zealand's economic recovery will continue over the coming year, although it won't be much to write home about.
After a strong expansion in GDP in the third quarter last year, the Treasury now expects the fourth quarter figures – due for release on March 22 – to show GDP of around 0.6% for that period. That is down from the 0.9% officials predicted in the pre-election economic and fiscal update (PREFU).
The third quarter boost was mostly the Rugby World Cup lifting sales in retail and the hospitality industries, and that is expected to drop away.
Looking ahead, the main issues domestically are how much New Zealanders will maintain their savings habits, picked up over the past couple of years; the pace and scope of the Canterbury rebuild, and the impact the government's withdrawal of the fiscal stimulus over recent years will have on growth.
But the main risks are offshore.
"As the euro debt crisis drags on and other risks to the global economy increase, international agencies such as the IMF have revised down their forecasts and have also included large downside scenarios based on a deepening of the crisis….With high levels of uncertainty about the outlook, volatility in financial markets is likely to remain a feature of the coming year."
Rob Hosking
Wed, 08 Feb 2012
Wed, 08 Feb 2012
© All content copyright NBR. Do not reproduce in any form without permission, even if you have a paid subscription.
Subdued recovery to continue - Treasury
18749