BNZ Weekly Overview - Jan 18 2007

Welcome to the first 2007 edition of the BNZ Weekly Overview.

The New Zealand economy easily avoided the recession many were worried about this time a year ago and recent economic indicators suggest an improvement in activity over the second half of last year which may continue through the first half of 2007. Business and consumer confidence levels have risen firmly along with business hiring and investment intentions. Exports are growing along with commodity prices. Over 2007 and 2008 we expect growth near 2% which will be half the rate achieved on average from 1999 to 2005. Growth will be constrained by a shortage of resources, an exchange rate continuing at overvalued levels for most if not all of the year, and the absence of any easing in monetary policy from the Reserve Bank until 2008.

This week's Overview is longer than usual as we cover a month’s worth of data in the Economic Developments section.

Best regards

(See attached file: WOJan18.pdf)

Tony Alexander
Chief Economist
Economics
Bank of New Zealand

ENDS

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