NEW ZEALAND IMMIGRATION NEWS

New Zealand Economy to Resume Growth in 2009

Thursday, 4 December 2008

The New Zealand Institute of Economic Research (NZIER) expects there to be modest growth in the New Zealand economy in 2009. They anticipate growth will then accelerate in 2010 and 2011.

The NZIER's Quarterly Predictions, a comprehensive commentary and forecast about the New Zealand economy, forecasts that the current recession will remain relatively shallow. The institute confirmed that the New Zealand economy declined for in first half of 2008. This decline means the country is in its first recession for nearly 10 years.

The NZIER forecasts positive growth, however, for the first quarters of 2009. They forecast that this growth will lead to a 1.6% growth in the year to March 2010. They expect the economic growth to accelerate to 3.3% in the year to March 2011 - led by an upturn in private consumption from the first half of 2009 and then strengthening global economic growth from the second half of 2009.

The NZIER anticipates that the recovery of economic growth in the first half of 2009 will be stimulated by "lower petrol prices, lower interest rates, positive net immigration, wage inflation and the tax cuts in October 2008 and April 2009".

New Zealand's Reserve Bank started its easing cycle earlier than financial analysts expected. The Official Cash Rate (OCR) was reduced by a total of 175 basis points between July and October 2008 and this easing cycle is expected to continue until there are clear signs of recovery in economic activity. At the next meeting, on 4 December 2008, the Reserve Bank governor Alan Bollard is widely expected to cut the OCR by one percentage point or more.

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