Bangkok (UN Information Services) – New Zealand’s economic growth is forecast to moderate in 2008 to 2.3 per cent after a buoyant 3.1 per cent last year, amid tighter credit conditions and a cooling in household consumption, according to the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
In its Economic and Social Survey of Asia and the Pacific, ESCAP said private consumption is still expected to support overall economic growth, backed by higher disposable incomes along with wages and employment growth. The outlook is for higher growth in 2009 of 2.7 per cent.
But a key concern lay in increasing difficulties that households have in balancing expenditure with rising debt service costs, ESCAP said. “Household debt has risen with rising interest rates and stood at 160 per cent of disposable income in 2007,” it said.
Inflation concerns had also led to higher interest rates through 2007, with the underlying consumer price index rising by 3.2 per cent over the year. “Tight labour market conditions, capacity constraints, and high prices for inputs such as oil and dairy products, all indicated upward pressure to output prices,” ESCAP said in its Survey.
New Zealand’s labour market conditions have remained tight, with unemployment reaching an historic low of 3.5 per cent in 2007. ESCAP noted that the business sector faced increasing difficulties in locating both skilled and unskilled labour. However, a key feature in the strong demand for labour was largely focused on part-time rather than full-time workers.
But strong exports led to a narrowing in the trade deficit boosted with higher dairy product price increases. But the overall gains were partly offset by a strong New Zealand dollar. The current account deficit stood at 8.3 per cent of gross domestic product (GDP) in the year ended September 2007 pointing to a large deficit in investment income and transfers balance.
In the area of international trade, ESCAP says New Zealand would register significant gains from settlement under the Doha round of trade talks. ESCAP estimates a settlement could lead to gains of US$390 million in the short term and US$324 million in the long term. It added that benefits from a comprehensive trade agreement would lead to gains of US$529 million in the short term and a long term benefit of US$506 million, or about one per cent of GDP.
Further information on the Survey can be found at:
For more information, please contact:
Hak-Fan Lau, UN Information Services, ESCAP
Tel.: +66-2-288-1866, Mob.: +66-84700-1147
Ari Gaitanis, UN Information Services, ESCAP
Tel.: +66-2-288-1862, Fax: +66-2-288-1052