NZIER Predicts Slow Economic Recovery
March 1, 2010 New Zealand Finance
The New Zealand Institute of Economic Research (NZIER) has released its latest report, in which it describes New Zealand’s economic recovery over the upcoming years as “jagged”, along with “bumpy and subdued”.
On March 1st, the NZIER released the March 2010 Quarterly Predictions report, which stated that although New Zealand is no longer facing a recession, its economic recovery will be slow and “jagged”. Growth of only 2.7 percent was projected for the 2010 calendar year, and 1.4 percent for 2011. Shamubeel Eaqub, NZIER Principal Economist, stated that several key economic indicators, both internationally and locally, are giving cause for concern and calling for restraint on any recovery estimates.
According to the report, the New Zealand Reserve Bank does not yet have any reason to raise the Official Cash Rate (OCR) yet, though the move should be considered in September. Unemployment in 2010 will peak at 7.5 percent, compared to 7.3 percent in December 2009. Further, constraints in wages will be seen for another 12-24 months. Household spending is projected to experience a slow recovery. The report also claimed that the housing sector will experience slow growth, and be hampered by rising mortgage rates.
Shamubeel Eaqub admitted to a certain amount of uncertainty in regards to any economic projections made, as there are renewed signs of flagging consumer confidence both within New Zealand and internationally. Additionally, yet to be announced tax regime changes lend a level of unpredictability to the growth and recovery possibilities of New Zealand.
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