Global situation crucial for NZ growth - Key

Prime Minister John Key. Photo / Greg Bowker

The performance of the global economy over the next six months will be key to New Zealand's growth prospects as economic data from the United States and Europe worsens, Prime Minister John Key says.

Speaking on TVNZ's Breakfast programme, Key said a deteriorating global situation could have some impact on the domestic economy.

Key said he met with the Asian head of the World Bank at the Pacific Forum in Auckland last week who said the Bank was still forecasting global growth at over 3 per cent for this year, despite having lowered their forecast.

"I think it [the weakening global outlook] can have some impact, but I wouldn't want to overstate that yet. It depends what happens in the next six months I think," Key said.

The environment in the US in particular was very weak, he said.

"They're now saying - and I remember being on [Breakfast earlier this year] saying President Obama said to me the unofficial unemployment rate was 13 per cent to 14 per cent - they were saying in the weekend that it is 16 per cent. That's a lot of Americans out of a job," Key said.

Credit rating agencies had been saying the New Zealand government was "doing the right thing" in terms of its debt and surplus tracks.

"But the bit we can't control is the environment in the United States and Europe, and what we're seeing is very weak numbers out of both of those economies. Now, the problem for us is that feeds into both global confidence and global demand," Key said.

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