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Finance Minister Michael Cullen says he expects the United States House of Representatives will eventually agree to a financial bailout package because failing to do so would have serious consequences.
Dr Cullen was speaking just after it was reported that the US$700 billion ($1.03 trillion) rescue package had been voted down 228-205, despite urgent pleas from President George W Bush to quickly bail out the staggering US financial industry.
Dr Cullen said he was surprised the package was turned down.
"That doesn't mean they won't have another go," he said on Radio New Zealand.
"At the end of the day it's hard to believe that the lower house won't approve some sort of package."
Dr Cullen said credit markets were drying up and without a bailout that would continue to happen.
"That flows through into the real economy, because businesses are then unable to borrow, sectors like construction come under even more pressure than they are at present in the US and elsewhere in the world.
"So what is a very large financial crisis then turns into a generalised economic crisis and significant downturn."
Dr Cullen said he found it hard to believe people were going to want to be seen as responsible for what would unfold if no package was approved.
"The effects of that will, I think, be quite serious."
Dr Cullen said an international economic crisis posed dangers for New Zealand.
"The credit crunch is pretty serious for a country like ours where the private sector is heavily exposed to offshore debate, and also indirectly because when the world economy turns down that puts further pressure on our export sector."
- NZPA
