Economists see 3 quarters of recession plus high inflation
24th Sep 08, 11:07am
New Zealand's economy will experience three quarters of recession (March/June/September 2008), according to the consensus of economists surveyed by the New Zealand Institute of Economic Research. Economists also see inflation peaking at 4.9% in September 2008 and the New Zealand dollar dropping further than previously expected. The NZIER consensus forecast for seasonally adjusted GDP growth is -0.3% for the June 2008 quarter and -0.1% for the September 2008 quarter. March 2008 GDP growth was -0.3%. For the year ending March 2009, the consensus for GDP growth is 0.2% and it is expected to recover to 3.1% for the year ending March 2011. The consensus on consumer price inflation is for it to peak at 4.9% in September 2008. Annual inflation for the year to June 2008 was 4%. Inflation is expected to remain above the Reserve Bank's 1-3% target band until September 2009. If the consensus holds, then the year ended September 2008 will record the highest annual rate of inflation since December 1990. The New Zealand dollar is expected to average 65.1 and 62.0 on a trade weighted basis for the years ending March 2009 and 2010, respectively. These forecasts are down from 67.0 and 63.5 in the previous NZIER June survey. Residential investment growth is expected to be -14.3 % for the year ending March 2009 and -2.8% for the year ending March 2010. Real private consumption is expected to experience its first year of negative growth since September 1992. It is expected to be -0.1% for the year ending March 2009. This is down from the 0.8% forecast in the previous. The forecast real public consumption growth for the year ending March 2009 rose to 4%. Forecasts of the Government operating surplus are NZ$1.6 billion for the year ending March 2009, and NZ$1.5 billion for the year ending March 2010. The unemployment rate is forecast to be 4.4% for the year ending March 2009 and 4.9% for the year ending March 2010.