NZ Economy Recovering

November 9, 2009 International TaxationNew Zealand Finance

The New Zealand economy is showing definite signs of recovery, though warnings have been given not to over-estimate its pace.

According to statements made by John Key, New Zealand Prime Minister, and reports by the New Zealand Reserve Bank, the economy will continue to recover over the second half of 2009. The Prime Minister said that the New Zealand GDP in the fourth quarter will be “quite good” and that the third quarter figure “won’t be bad either”.

The recovering economic figures are due highly to the recovery of the Australian economy, destination for approximately one quarter of New Zealand’s exports. This prompted Alan Bollard, Reserve Bank Governor, to issue a waring that while New Zealand and Australia and New Zealand are closely related, they are not the same economy and act differently. According to him, New Zealand is “slower and more vulnerable”. He continued to say that “a difference financial markets do not appear to appreciate”. He wared that investors seem to be treating New Zealand and Australia the same, and that while looking at the current recovery, this was a mistake.

Several economic indicators are serving to confirm the recovery sentiment. House prices have risen 7.9 percent since January, business confidence is at a 10-year high. Consumer spending and confidence reports are also positive. The Reserve Bank statements give indicator that their policy of fiscal stimulus will not cease until mid-2010.