KEY POINTS:
While most forecasters, like the Reserve Bank last week, are taking a bleak view of the economic outlook, Westpac has reminded us it is always darkest before the dawn.
"There are several reasons we are optimistic the economy will bounce back in 2009 - even though interest rates will stay relatively high," says its chief economist, Brendan O'Donovan.
His sanguine view starts at the grass roots. The early signs are that the coming growing season will not suffer a repeat of last season's drought.
A return to normal growing conditions, plus the hectic pace of dairy conversions, could see agricultural production up 7 or 8 per cent.
Fonterra's first estimate of the payout for next season is $7 a kilogram of milksolids, not far off the record $7.90 for the current season.
And after years in the doldrums, meat prices are rising on international markets. This may not be good news for the consumer, but it is positive for the national economy.
"For the economy as a whole, times are better than they feel in the cities."
Meanwhile Finance Minister Michael Cullen has just delivered the most stimulatory Budget for 10 years with tax cuts, an increase of nearly 8 per cent in Government spending and the prospect of more tax cuts to come.
For manufacturers the dollar's fall against the Australian dollar in the past three months improves their competitiveness in their main export market by about 9 per cent.
Retailers have found the going heavy in the past year, in part because of a drying-up of housing equity withdrawal, when households collectively withdraw more equity from housing than they are injecting. It is a feature of housing booms and while it lasts it allows consumer spending to grow faster than incomes.
But Mr O'Donovan predicts there will not be
an equally large fall next year.
"New Zealand has to go through a period where consumers spend less than they earn, after years of doing the opposite. But once these imbalances are tackled, the economy can and will rebound."
