New Zealand Avoids Double-Dip Recession
January 12, 2011 New Zealand Finance
Economic activity in New Zealand showed signs of improvement over the December quarter, indicating that the country avoided a double-dip recession following the international financial crisis.
On January 11th the New Zealand Institute of Economic Research (NZIER) released its Quarterly Survey of Business Opinion (QSBO), which showed that the national economy expanded in the 2010 December quarter after a contraction in the September quarter.
According to the QSBO the December quarter saw an improvement in overall seasonally adjusted firms’ trading activity, compared to the previous quarter. The report stated that in the December quarter national firms saw their trade fall by 1 percent, a 14 percent improvement over the trade loss seen in the September quarter. The increase to the trade figure was reflected by an improvement to the labor market, with new hiring contracting by only 3 percent in the latest quarter, compared to 12 percent in the September quarter. The NZIER suggested that the recent pick up in activity means indicates that New Zealand avoided a potential double-dip recession. The economic pick-up was heavily divided among various regions of New Zealand, with the upper North Island leading the increase, and the Canterbury area suffering after last year’s earthquake.
Shamubeel Eaqub, Principal Economist at NZIER, commented on the improved economic activity, saying, “The economy rebounded from a weak September quarter avoiding a double dip recession. The recovery remains shallow and slow compared to previous cycles.” He added “A return to growth has brightened business mood: seasonally adjusted business confidence rose from -8% to 3%. This confidence is slowly filtering through to new hiring and investment, but this needs to accelerate to drive a sustainable recovery.” The combined increases are expected to eventuate in a hike in cooperate profits over the short-term, and a subsequent increase to national cooperate tax revenues.
Photo by Darrren Hester