Economic outlook eases, labour market recovery delayed
Tuesday 21 September 2010, 9:23PM
By Fraser Mills
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New Zealand is not heading for a double-dip recession, but the outlook is less optimistic than in June according to NZIER’s survey of forecasts.
The NZIER Consensus Forecasts, compiled from a survey of financial and economic agencies, shows a 2.8% growth in 2011, down from 3.2% expected in the June survey.
Growth for 2012 is expected at 3.1% (down from 3.3%), softening to 2.6% for the March 2013 year.
"Revisions over the past quarter diverged sharply, reflecting a shallow recovery and uncertainties following the Canterbury earthquake," NZIER says.
Consumer price inflation will spike due to GST and other policy changes, peaking at 4.7% for the year ending in March 2011. The inflastion rate, excluding one-off effects, is expected to be 1.9% in the March 2011 year and 2.4% in the March 2012 year.
"Personal tax cuts will compensate households for these one-off price increases, but general inflationary pressures will erode 80%-90% of wage gains over the next two years," NZIER says.
The labour market recovery looks to be delayed with forecasters predicting a modest rise in the unemployment rate to 6.2% for the March 2011 year. The unemployment rate is expected to gradually improve to 5.3% in the March 2013 year as the recovery accelerates.