Annual growth forecast at 1.6pc
ECONOMISTS from Westpac and ASB Bank expect official figures on Thursday will show the economy grew 0.6 per cent in the final quarter of 2011, taking annual growth for the year to 1.6 per cent.
Westpac senior economist Michael Gordon said that while such growth was unremarkable, it would be ‘‘the envy of many developed countries at the moment’’.
There are signs of a pick-up in the international environment, however. International Monetary Fund chief Christine Lagarde delivered a cautiously upbeat assessment of the global economy during a visit to China yesterday, saying the measures taken to fight financial woes in Europe and the United States were starting to pay off.
‘‘Even just a few months ago, the situation was decidedly gloomy. Yet, today, we are seeing signs of stabilisation; that policy actions are paying off.
‘‘Financial-market conditions are more comfortable and recent economic indicators are beginning to look a little more upbeat, including in the US.’’
New Zealand’s quarterly figures will have been boosted by higher retail spending during the Rugby World Cup finals.
Gordon said farmers benefited from ‘‘excellent growing conditions’’ with milk production rising 7 per cent for the quarter, but it expected a sizeable drop in manufacturing output – which would not have been helped by the widespread gas outage in the upper North Island in October.
Public sector spending cuts may also impact the figures. ‘‘We expect a decline in government administration, with the initial focus on reprioritisation having given way to outright spending cuts.’’
ASB Bank chief economist Nick Tuffley said recent data suggested the recovery was ‘‘gaining a firmer footing’’, with the construction industry finally showing the first tentative signs of improvement. Tuffley expected the economy would continue to recover gradually this year but not at a speed that would persuade the Reserve Bank to raise interest rates before December.
He was upbeat about the outlook for manufacturing activity in the first half of this year.
‘‘Business confidence is recovering in light of the progress made overseas in regards to the European debt crisis.’’
In a further indication of that progress, Greece’s central bank chief, George Provopoulos, said the country’s hard-hit banks might not need all the 50 billion of aid earmarked by the European Union and the International Monetary Fund to help them recapitalise.
He warned that for Greece to leave the eurozone would be like ‘‘opening the gates of hell’’, but said ‘‘fortunately, the decisions by the Eurogroup . . . are making this scenario distant’’.
US financial services group Citi forecast ‘‘10 years of continuous earnings growth’’ would see the top 100 British company stocks double in value to hit a record high by 2022.