KEY POINTS:
New Zealand's economy will experience three quarters of recession (March/June/September 2008), according to the consensus of economists surveyed by the New Zealand Institute of Economic Research.
Economists also see inflation peaking at 4.9 per cent in September 2008 and the New Zealand dollar dropping further than previously expected.
The NZIER consensus forecast for seasonally adjusted GDP growth is - 0.3 per cent for the June 2008 quarter and - 0.1 per cent for the September 2008 quarter. March 2008 GDP growth was - 0.3 per cent. For the year ending March 2009, the consensus for GDP growth is 0.2 per cent and it is expected to recover to 3.1 per cent for the year ending March 2011. The consensus on consumer price inflation is for it to peak at 4.9 per cent in September 2008.
Annual inflation for the year to June 2008 was 4 per cent. Inflation is expected to remain above the Reserve Bank's 1-3 per cent target band until September 2009. If the consensus holds, then the year ended September 2008 will record the highest annual rate of inflation since December 1990.
The New Zealand dollar is expected to average 65.1 and 62.0 on a trade weighted basis for the years ending March 2009 and 2010, respectively. These forecasts are down from 67.0 and 63.5 in the previous NZIER June survey. Residential investment growth is expected to be - 14.3 per cent for the year ending March 2009 and - 2.8 per cent for the year ending March 2010.
Real private consumption is expected to experience its first year of negative growth since September 1992. It is expected to be - 0.1 per cent for the year ending March 2009. This is down from the 0.8 per cent forecast in the previous consensus.
The forecast real public consumption growth for the year ending March 2009 rose to 4 per cent. Forecasts of the Government operating surplus are NZ$1.6 billion for the year ending March 2009, and NZ$1.5 billion for the year ending March 2010. The unemployment rate is forecast to be 4.4 per cent for the year ending March 2009 and 4.9 per cent for the year ending March 2010.
- INTEREST.CO.NZ
