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Recession ending, property to recover says NZIER

Recession ending, property to recover says NZIER

The New Zealand Institute of Economic Research (NZIER) believes the recession part of the cycle is nearly over and the economy will get better in the short term as a lower New Zealand dollar and easing interest rates boost export returns and consumer spending. Energy and food price increases appear to be past their peaks and the property market is not expected to fall much further, the independent research group said in its September 2008 Quarterly Predictions Report. The NZIER believes that the property market will be supported by private investors looking for safe havens for their funds as they are now reluctant to leave these funds with finance companies.The report says that the current recession will be short as wage growth looks set to remain high, and that the October tax cuts will boost consumer confidence. Food and energy price increases appear to be past their peaks and interests rates look set to be slowly eased. "All these factors will support a return to growth in private consumption," said Brent Layton, Chief Economist of the NZIER. But although the economy is expected to recover in the short term, the NZIER stressed that it does not think full recovery to robust economic health will be quick and without further adjustments, as inflation is still high and likely to go higher. The NZIER believes that by lowering rates in July, the Reserve Bank fed inflationary expectations and constrained their ability to move rates much lower.

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