Treasury points to weaker economic activity

Treasury has become increasingly downbeat, reflecting the failure of National to lead New Zealand out of the economic recession, says Labour’s Finance spokesperson David Cunliffe.

David Cunliffe said the Treasury Monthly indicators for October, released today, reflected just how soft economic activity is in New Zealand.

“Highlights --- or more accurately, low lights --- of Treasury’s report include:
o The Half-Year Update forecasts, currently being prepared, are likely to show a weaker level of economic activity over the forecast period relative to Budget forecasts;
o Consumption remains weaker than our Budget forecast, contributing to a GDP outturn that is likely to fall short of our forecast;
o Increases in food prices and government-related charges made significant contributions to the 1.1% rise in the September quarter CPI;

“And the last of those low lights occurred before GST increased 20 percent on 1 October,” David Cunliffe said.

David Cunliffe said Treasury’s indicators followed a series of bad new stories for the National Government.
o Statistics New Zealand last week reported the first decrease in the total number of businesses in New Zealand for nine years.

o Statistics also reported that the total number of paid employees, while not an official employment statistic, was 1.89 million, a 1.9 percent decrease from February 2009. “The Australian Government has created 400,000 new jobs, while more than 50,000 have disappeared in New Zealand under National.”

o The NZIER Survey of Business Opinion in October showed the New Zealand economy in reverse, with a collapse of business activity.

o Berl has warned of risks of a double dip recession, and the International Monetary Fund has warned governments not to back off stimulus packages before 2011.

“National simply cannot claim they are managing the economy well,” David Cunliffe said. “The opposite is true. Australia and China are growing strongly. Under National, New Zealand is in decline.”

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