Wellington - New Zealand consumers, who have kept their
wallets closed as the economy moved into recession for the first time
in nearly 10 years, will fire a gradual recovery when they start
spending again next year, an influential think tank predicted on
Tuesday.
The New Zealand Institute of Economic Research (NZIER) forecast
the recession to continue through the current fiscal year ending in
March with economic activity contracting to its lowest point of 0.1
per cent
It would recover slowly during next year, with private consumption
stimulated by lower petrol prices, falling interest rates and tax
cuts from October 2008 and anticipated tax cuts in April 2009, NZIER
said in its scheduled quarterly predictions.
Growth would then accelerate from 2010, NZIER said.
NZIER analysts predicted modest growth of 1.6 per cent in the year
to March 2010, lifting to 3.3 per cent the following year.
They forecast the current recession to remain relatively shallow,
but the recovery to be gradual because of the lagged effect of
prolonged high interest rates and tighter credit requirements in
recent months which would dampen investment growth.
They also said export growth would be limited by weaker growth of
New Zealand's trading partners than was previously anticipated.
Analysts are confidently expecting the Reserve Bank to stimulate
the economy by cutting its benchmark interest rate at least a full
percentage point to 5.5 per cent in a scheduled review of monetary
policy on Thursday.
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