Any recession in the first part of this year would be small and short, Finance Minister Michael Cullen says.
Dr Cullen today reiterated that he did not expect a recession, with positive growth projected for the March quarter.
But he said even if one was to occur it would be about as short and small as a recession could possibly be - in contrast to the last recession in the 1990s, precipitated by the Asian economic crisis.
Gross Domestic Product (GDP) data released last week showed the New Zealand economy shrunk 0.1 per cent in the final three months of last year.
Another quarter of negative economic growth would technically be considered a recession.
But Dr Cullen said the economy was much healthier than in the late 1990s.
"In particular, business investment has held up much more strongly in areas like plant and equipment which is at much higher levels now than in 1997 through to 1999 and that bodes well for the future," he said on National Radio.
National finance spokesman John Key told National Radio that the slowdown would be worse than needed because the Labour-led Government had failed to properly prepare for it by boosting spending on key infrastructure and trimming it in areas that were unnecessary.
Tax cuts would have also helped boost economic growth, he said.
But Dr Cullen said the issues contributing to the slowdown were long-term ones that the Government was already working on.
"The issues around stronger growth in New Zealand are issues of infrastructure, skills and savings."
He said the Government had 10 times as much major roading projects under construction now than when it took over from National in 1999.
The Government had moved to a more focused approach to skill training and development and had moved to shore up government savings through the superannuation fund and private savings through its Kiwisaver scheme.
He said over stimulating the economy through tax cuts would not solve any long-term problems.
- NZPA
Cullen predicts 'short and small' recession
Michael Cullen
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