Growth Set To Return This Year
June 4th, 2009
The NZ Institute of Economic Research predicts the recession will continue through to September, with renewed growth coming in December. The Institute expects December quarter growth to be led by migration-induced population increase and “considerable stimulus” from monetary and fiscal policy. But the institute estimates a 2% contraction in the March 2009 year, followed by another year of contraction, of -1.4%, in the March 2010 year. The predicted recovery path will average 3.5% over the following five years, but it will mean growth well below the trend of the past 10 years, and equate to reduced income of around $10,500 per person per year over the next five years. This means the economic environment will be difficult for both business, due to reduced demand, and households, due to lower wage increases.
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Duncan Cotterill