Solid Growth Ahead, Global Economic Outlook Slow
Solid Growth Ahead But Global Economic Outlook To Slow
The New Zealand economy is on track to rebound with growth to average just over 3% annually over the next three years, said WestpacTrust chief economist Adrian Orr in the December 2000 Quarterly Economic Overview.
Mr Orr said WestpacTrust was forecasting GDP growth rising from 2.6% in the year ended March 2001 to 3.6% in the year ended March 2002, set against a slower outlook for global economic growth.
Exports were leading the charge – currently valued 20% higher than they were at the same time last year. However, consumer spending and residential and business investment were all more subdued. This mix looks set to change over the next couple of years, with domestic spending set to rise and the global outlook slowing.
However, there were risks related to the global economic outlook and questions over whether or not domestic demand was likely to be constrained by declining wealth, Mr Orr said.
“The international economy has reached a critical juncture. Recent evidence suggests that the United States’ economy is becoming a potential `weak link’ in the international economy. Slower US economic growth will raise concerns over the sustainability of the export-led recovery in some Asian economies and Australia.” Domestically there remained an issue with how households would adapt their spending patterns to reduced household financial wealth, which has stagnated since 1997. For the most part, the decline in New Zealand wealth was linked to the property market, with average increases in house prices averaging just over 3% per annum since late-1997, compared with 10% in the mid-1990s. Residential investment was likely to remain subdued until at least mid-2001.