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Optimism to Fuel Retail Sales Growth in NZ

Income and Employment Optimism to Fuel Retail Sales Growth in New Zealand

New Zealand, 22 September 2004 – MasterCard today announced that New Zealand can expect growth in retail sales in the second half of 2004

Released by MasterCard International, the MasterIndex of Retail forecast places New Zealand eighth out of 12 Asia/Pacific markets and predicts that retail sales in this country will continue to grow by 6.8% year-on-year, reaching NZ$15.8 billion in value.

Although the recently released MasterIndex of Consumer Confidence showed that New Zealand consumers are less optimistic than they were six months ago, with a score of 56.5, it also showed that they are highly optimistic about regular income and employment - confidence that has buoyed the latest retail sales forecast.

Conducted twice a year in June and December, the MasterIndex of Retail was launched in June 2003 by MasterCard as part of its knowledge leadership in Asia/Pacific. It is among MasterCard’s MasterIndex suite of research initiatives, providing six-month forecasts of retail sales growth in 12 markets: Australia, China, Hong Kong, Indonesia, Japan, Korea, Malaysia, New Zealand, Philippines, Singapore, Taiwan and Thailand.

Year-on-year retail sales volumes are anticipated to grow for all 12 Asia/Pacific markets covered under the forecast for the second half of 2004.

Dr. Yuwa Hedrick-Wong, economic advisor, Asia/Pacific, MasterCard International, commented, “The interest rate cycle has started to move up since the Federal Reserve raised interest rates in June. We have seen how the uncertainty related to the new interest rate environment has affected consumer outlook on the stock market in Asia/Pacific in our latest MasterIndex of Consumer Confidence survey. From the point of view of consumer spending and retail sales, however, the outlook is one of continuing strength in the region. Expectations of stronger income growth and better employment conditions clearly have more than compensated for higher interest rate expectations. This bodes well for retailers and the service sector generally.”

Combining 10 years of retail sales data , factoring in the secular trend of growth of the retail industry, GDP outlook, and using the MasterIndex of Consumer Confidence as an independent variable , an estimate of retail sales value is obtained for the same six-month horizon covered by the MasterIndex of Consumer Confidence.

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