Optimistic IMF Forecast For New Zealand

11 October 2012 18:00 - Which Way to Pay

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Optimistic IMF Forecast For New Zealand

The International Monetary Fund downgraded its expectations for growth in the world economy to 3.3% this year down from a 3.5% estimate seen in July. The agency forecasted the global economy will grow by 3.6% in 2013, again down from a July prediction of 3.9% and an April forecast of 4.1%. the IMF said the reason for the downgrades were because of weak growth and fears of recession in some advanced economies which will further affect emerging economies as global trade looks set to slow. Olivier Blanchard, Chief Economist of the IMF said, “Low growth and uncertainty in advanced economies are affecting emerging market and developing economies through both trade and financial channels, adding to homegrown weakness.”

Both New Zealand and Australia are forecast to grow at twice the rate of other advanced economies next year. The IMF has slightly pulled back its forecast for the New Zealand economy, predicting it will expand 2.2% this year and 3.1% in 2013 partly thanks to rebuilding plans in Canterbury. New Zealand’s forecasted growth in 2013 compared well with Europe and the US, which are both suffering crises. Michael Gordon ,Westpac Bank senior economist said the IMF's forecast for New Zealand was, if anything, a little conservative."I would say it's on the low side for both years, but to be fair, we tend to be at the upper end.” He added, "We tend to find that the regions they're picking growth to be faster in are where there's leeway for spending, in our case, the stimulus from the rebuilding in Christchurch."Gordon said the rebuild would likely generate at least $20 billion towards the economy, or 10% of annual GDP.

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Related Links:
• IMF
World Economic Outlook

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