Brash defends prediction

National leader Don Brash is standing by a speech in which he warned an economic recession was likely - despite indications the country has avoided one.

Dr Brash attacked Labour's economic management in January, arguing the country was "almost certainly" headed for recession if business confidence remained at the level it was at the time.

Yesterday, Statistics New Zealand released data showing that the country's gross domestic product grew by 0.7 per cent in the March quarter. Finance Minister Michael Cullen quickly seized on Dr Brash's speech.

"National leader Don Brash predicted recession. His credibility on economic matters is well and truly shot," Dr Cullen said.

A recession is defined as two financial quarters of negative economic growth. New Zealand's GDP declined by 0.1 per cent in the December quarter last year, but grew by 0.2 per cent in the previous quarter. Technically, a recession has been avoided.

Dr Brash said yesterday he had always been careful to say that if business confidence kept going the way it was when he made the speech, a recession was possible.

He said the country still faced a period of "very, very slow growth".