It is possible the economy entered a double-dip recession in the December quarter, Finance Minister Bill English said yesterday.
"People have been saving harder and paying off debt quicker than we thought and they are not rushing back to the shops or back to the housing market. And the big
export prices farmers have been getting are not flowing through yet. So it is possible," he said.
Average household debt had risen from $61,000 in 2003 to $107,000 five years later. Farmers debt levels had increased even faster.
"This is a deleveraging recovery where the usual drivers of growing credit and consumption don't apply," English said.
But the Government was focused on the long term, on getting sustainable higher incomes from a growing export sector, he said.
It would not take initiatives that slowed down the rebalancing process.
"The Government will not go out and buy jobs," he said. Its focus was on setting up the right climate for productive investment to create jobs.
But Labour's finance spokesman David Cunliffe said the admission that New Zealand might already have suffered a double dip recession was a shameful commentary on National's do-nothing approach to the economy.
English said the Budget would be delivered on May 19.
