Growth prospects good, says IMF

By JIM EAGLES AND REUTERS

The economies of New Zealand and Australia should log good growth next year, but could face pressure if global growth and commodity prices stay soft, says the International Monetary Fund's latest global growth assessment.

The Washington-based lender said the pace of economic growth in New Zealand was expected to slow to 1.9 per cent next year.

In September, the IMF projected New Zealand's growth to be at 2.9 per cent.

Australia should record gross domestic product growth of 3.3 per cent next year, a downward revision from the 3.8 per cent the IMF forecast for the country in September.

"Economic conditions in Australia, and to a lesser extent New Zealand, appear reasonably robust, despite some recent weakening of confidence," the IMF said.

"Export performance has been well-sustained in both countries in 2001 - helped by weak currencies and, in New Zealand, by more favourable agricultural growing conditions - and this has contributed to sharp reductions in their current account deficits."

The IMF said household spending had held up "quite well" in both countries, helped by lower interest rates.

Looking at the world economy, the IMF continued to predict solid growth, and a quickening pace towards the end of next year.

Kenneth Rogoff, the IMF's economic counsellor and director of research, said the organisation had cut its forecast for world growth next year by 1.1 percentage points to 2.2 per cent.

But he stressed that this still represented a fairly satisfactory situation.

"I don't want to imply that the current slowdown is not a very serious one," he said.

"There are many regions of the world that are clearly in recession - the United States, Japan, Germany have had two negative quarters of growth - and there are several other countries that by many definitions would be considered in recession.

"But the world includes countries such as China and India, which are very large and growing significantly.

"So, by this measure, compared to the earlier slowdowns, particularly if we look at per capita GDP, this one is somewhat more mild."