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New Zealand’s recovery will gain momentum in 2010
New Zealand’s recovery will gain momentum in 2010
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• Expansion to quicken in 2010 as exports lead economy out of recession
• Improved confidence will buoy consumer and business spending
• RBNZ policy tightening to begin in March; OCR to reach 4% by end-2010
The New Zealand economy emerged in 2Q09 from a prolonged recession that extended for five painful quarters, the worst outcome on record. We forecast that real GDP shrank 1.6% in 2009, but expect the economy to gain momentum during 2010 to post full-year growth of 2.4%. The continued recovery will owe much to firmer exports, due to stronger trading partner growth and higher international commodity prices, which will boost national income. The dominant risk comes from offshore. An unexpectedly soft global recovery—we are forecasting above-consensus global GDP growth of 3.4% in 2010—would dampen our view on New Zealand.
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