23 June 2006

Doomsayers wrong over economy

The March quarter GDP result flies in the face of those who predicted doom and gloom for the New Zealand economy, Finance Minister Michael Cullen said today.

Over the March quarter the economy expanded by 0.7 per cent, at the high end of market expectations. Annually, GDP grew 2.2 per cent.

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

"The economy is clearly slowing after the most sustained period of economic growth in 30 years, but it is certainly not heading for a hard landing as Dr Brash likes to think.

"However, GDP quarterly numbers do bounce around and I would expect continued slower growth over the remainder of the year until the lower exchange rate flows through to export growth.

"Dr Brash's prescription of multi-billion dollar tax cuts would have been precisely the wrong medicine. It would have sparked more inflation, lifted interest rates and ensured a hard landing.

"His reckless policies would have widened the already large current account deficit and triggered a credit rating downgrade. Standard & Poor's yesterday reiterated the wisdom of the government's "steady course of fiscal discipline" as the right approach.

ENDS

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