New Zealand Economists Cut Growth Predictions For Economy

20 March 2012 01:00am - Florence Fullalove

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New Zealand Economists Cut Growth Predictions For Economy

New Zealand economists have cut their growth predictions over the next two years as they expect a slower and shallower recovery as the Canterbury rebuild suffers delays. According to the New Zealand institute of Economic Research’s consensus forecasts, the economy will grow 1.8% in the March 2012 year before accelerating to 2.7% and 3.2% in the subsequent two years. This is down from a previous forecast of 2.1% this year, and 3% in the each of the following years.

NZIER economic Peter Nicholls said, “Growth forecasts have been revised downwards for a second successive survey,” He added that “The main driver is a later and longer rebuild in Canterbury.” Respondents to the survey expect the Canterbury rebuild will start later and take longer to complete, with residential construction investment weak this year. However, even once reconstruction gets well under way, inflation is not expected to steam ahead, with consumer prices index forecast trimmed to a pace of 1.8% in the 1012 year, 2.1% in 2013, and 2.5% in 2014.

NZIER said that a slow recovery and a high exchange rate will restrain inflation over the next two years. “The slow recovery has meant a pullback in recent investment, reducing the need to borrow from overseas. But national savings remain too low, meaning the deficit will widen as investment recovers,” NZIER said.

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Related Links:
• NZIER
Consensus Forecasts, March 2012
• Economic Calendar
For scheduled economic events
• Latest News
For regular news updates

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