Growth great but current quarter looks weak

Dec economic growth great but current quarter looking weak

Statistics New Zealand’s economic activity data out today showing GDP was up 0.8 per cent in the December 2009 quarter, following a 0.3 per cent increase in the September quarter, is positive news. However the the first quarter of 2010 may prove to be quite different, claims an Auckland business advocate.

“The latest Auckland Chamber of Commerce business confidence survey and the Westpac McDermott Miller consumer confidence survey both point to a drop in confidence in the first quarter of 2010. What we might currently be experiencing is a bit of a double dip in economic performance," says Cameron Brewer, chief executive of the Newmarket Business Association.

"Last year when the economy technically came out of recession everyone rejoiced and there was a bit of a rally leading into Christmas. That’s what this latest economic data shows. However so far this year it’s been pretty quiet overall. Unfortunately the March quarterly economic performance figures may prove to be less positive than the December figures.

"Consumers are taking a wait and see approach this year. Subsequently people are keeping their hands in their pockets. Confidence is down, unemployment’s up, petrol's up, house prices are down, and interest rates are set to start climbing from June.

"Another two factors that are adding to business and consumer uncertainty, even subconsciously, are Auckland's imminent and massive amalgamation and the National Government’s second Budget on 20 May, which given all the tax changes is lining up to be the most significant in 20 years."

"It’s great that the December quarter was positive, but let's not forget that this now historical data. What the business community, Government, and Reserve Bank are more interested in is how 2010 is tracking,” says Cameron Brewer.

ENDS

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