New Zealand’s Economic Prognosis Low
November 19, 2010 New Zealand Finance
New Zealand’s economic recovery is now being described as “very slow” by Reserve Bank Governor Alan Bollard, although he remains optimistic for the country’s medium-term prospects.
The economic recovery of New Zealand could take longer than initially expected, with the Reserve Bank Governor Alan Bollard saying that it will be a “prolonged process”. The Governor explained the country’s economic situation at a Deloitte tax conference on November 19th, saying “we learnt that recovery to economic normality can be a slow, fragile and uncertain process, with temporary set-backs and aftershocks.”
The latest growth projection is based on the economic performances of the country’s major trading partners. With the US, UK and Japan currently displaying weak demand for New Zealand exports, demand for national goods and services is low. He added that the current pace of recovery adds justification for leaving the national Official Cash Rate (OCR) at the current 3 percent, until the first quarter of 2011.
Allan Bollard was more optimistic about the country’s economic growth over the medium-term, based mainly on projected recovery time-frames for major overseas economies. Australia’s mineral export boom is greatly aiding the country’s economy, and subsequently driving up the demand for New Zealand food and manufacturing sector products. Additionally, Asia’s continued positive economic position should aid New Zealand.
The Governor summarized his opinions, saying “…the medium-term outlook looks favorable.” Although he did not rule out the possibility of unexpected “aftershocks.”
Photo by Chris Gin