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New figures suggest retail spending is expected to grow a modest 2.5 per cent in the second half of 2008 - despite rising food and petrol costs.
The latest MasterCard Worldwide Index of Retail forecasts retail spend in New Zealand - excluding hospitality, catering and vehicle sales - to climb to $19 billion over the next six months. It places New Zealand 11th among the 12 countries covered by the index, behind only Japan which is forecast to experience 1 per cent retail growth.
Latest numbers from Statistics NZ for June have shown a slight rise in electronic card transactions, but a flat overall trend.
All 12 Asia-Pacific markets covered by the index were expected to continue seeing positive growth in retail sales, with China predicted to top them all with a forecast 18 per cent year-on-year growth.
The index uses analytic techniques linking consumer confidence trends with a decade of retail sales statistics.
While most of its forecasts for the second half of 2007 were wide of the mark, it rightly predicted the New Zealand retail sector's actual results of 4.69 per cent.
The economy was expected to slow in 2008 with real GDP growth estimated at 2 per cent, down 1 per cent from the previous year. Key to this was export growth of about 2.9 per cent, up 3 per cent from 2007.
This was, however, tempered by relatively high mortgage rates, expensive fuel, decreased disposable income and rising employment uncertainty, which was expected to stall domestic spending over the next 12 months.
But the free trade agreement with China, the dairy boom, upcoming personal tax cuts and increased fiscal spending during the election later this year would provide a slight lift.
The Mastercard Worldwide Index of Consumer Confidence has shed 19.3 points to 37.1, bringing the index to its lowest level since 1998.
Stuart McKinlay, New Zealand country manager for MasterCard Worldwide, said the data suggested that while New Zealanders may be feeling less confident in the economy as a whole, they are continuing to manage their retail spending appropriately.
