Bill English National Finance Spokesman

18 March 2001

Treasury warns of lower growth

Treasury has warned that the slowdown in global economic growth will have a material impact on the New Zealand economy, National's Finance spokesman Bill English said today.

Papers released under the Official Information Act contain advice from Treasury that the slowdown of the United States and other major trading partners could result in lower export prices and volumes for New Zealand. Treasury says that is likely to knock at least 0.5% off our future GDP growth.

"In the December Economic and Fiscal Update average trading partner growth was predicted as 3.7%, this document prepared on February 1 lowers that expectation to 3.2%," Bill English said.

"Since this paper was prepared, the outlook has deteriorated even further. Most commentators are now expecting average trading partner growth of around 2.5%.

"This will make the upcoming Budget, which is already tight, even tighter in the out-years. The combination of lower growth and lower inflation will see reduced operating balances in the future.

"Unfortunately the export boom looks likely to dissipate before it has had the chance to trickle down to the average kiwi family," Bill English said.

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