08 July 2009

New Zealand economy predicted to escape recession late 2009

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New Zealand's recession may end by the December quarter but unemployment will continue rising into 2010, peaking just below 8 percent, a survey of New Zealand businesses reported.

New Zealand economy

New Zealand economy is predicted to escape recession late 2009 after a survey showed increased business optimism.

The survey, conducted by the independently funded New Zealand Institute of Economic Research, says the New Zealand economy will have contracted in the June quarter and predicts that it will shrink again in the September quarter.

“The recession is not over yet,” said Jean-Pierre de Raad, chief executive at the institute. “What we see is a general improvement in sentiment.” 

Unemployment in New Zealand currently is at 5 per cent, but the institute's survey of some 3,500 New Zealand businesses said the number of those not working in New Zealand would hit 7.8 per cent by March 2010 - just above the government's 7.5 per cent projection in its May annual budget.

The institute's quarterly survey of business opinion is watched closely by the nation's Reserve Bank.

New Zealand may emerge from its worst recession in more than three decades by the end of the year amid signs of a recovery in global markets, Reserve Bank Governor Alan Bollard said last month.

Green shoots in the latest survey include a "significant improvement" in the still-gloomy level of company confidence, institute chief executive Jean-Pierre de Raad said in a statement.

Only a net 25 per cent of firms expect the general business situation to get worse in the three months ending September 30, a sharp improvement from the negative 65 per cent in the quarter ended June 30 - the worst level of market gloom in four decades of the survey.

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