Growth to ease then rebound

By Phil Boeyen, ShareChat Business News Editor

Thursday 20th December 2001

Growth in the New Zealand economy is tipped to ease next year but rebound the year after according to a consensus of economic forecasts.

The NZIER has compiled the consensus from a variety of financial and economic agencies. It says now that all respondents have had time to incorporate the effects of the September 11 terrorist attacks in their forecasts, a consistent picture of New Zealand' s growth profile has begun to emerge.

Included in the consensus summary is that the country's economic growth will fall from 3% in the current year to 2% in the 2002/03 year, but will then bounce back to around 3.3% in the following year, 2003/04.

Growth forecasts for the current year to the end of March have been marked up on previous forecasts, reflecting stronger investment, including residential buildings.

"However, weaker private consumption and export growth will offset stronger investment growth," the institute says.

"The anticipated impact of the events in September 11 is clearly reflected in forecasts for 2002/03, with overall growth revised from 2.6% to 2.0% in our latest survey."

Export revenue, private consumption and investment growth have all been revised downwards for next year, although forecasters believe residential investment has reached the bottom of its cycle, with growth expected to increase to 8.7% in 2002/03, spurred on by lower interest rates.

"Growth in 2003/04 is forecast to increase from 2.0% in 2002/03 to 3.3% in 2003/04 as all sectors are expected to expand. Inflation is set to ease," the NZIER says.

Forecasters are also picking a rise in the TWI, moderate wage growth and a slight rise in unemployment from its current rate of 5.2% to 5.4% by 2003/4.

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