Wellington, Oct 9 (IANS) New Zealand’s economic growth is forecast to slow in the second half of this year after a survey of business opinion published Tuesday showed a “gloomy” attitude and slowing economic activity in the quarter ending September.
The independent New Zealand Institute of Economic Research (NZIER) said its Quarterly Survey of Business Opinion showed businesses “remain gloomy” with the trading activity indicator dropping to minus 7 percent in the September quarter from a flatline in the previous quarter, reported Xinhua.
“This suggests annual GDP growth will slow from a solid 2.6 percent in the June 2012 quarter towards 1.5 percent in the second half of 2012,” said an NZIER statement.
The recovery “remains disappointing” with growth in the country’s largest city of Auckland growing, but the rebuilding surge in the earthquake-battered Canterbury region moderating “and activity elsewhere is slowing”.
“The labour market is softening. Canterbury hiring had been surging for the rebuild, but stalled in the last quarter. Hiring elsewhere has edged lower over the past six months,” NZIER principal economist Shamubeel Eaqub said in the statement.
The outlook for inflation was muted with excess capacity in all areas, except Canterbury, and price increases were modest.
“Firms are struggling to raise prices in a slow recovery. Margins and profits remain under pressure. Investment intentions, while positive, are low compared to what we normally see in a recovery phase,” said the statement.
The NZIER forecast that the Reserve Bank of New Zealand, the central bank, would hold interest rates at the historic low of 2.5 percent “for some time”, it said.
