Recession over, shallower than expected, says NZIER

The recession is over and the outlook is improving, according to economic forecasters in the latest NZIER consensus forecasts survey.

Economic forecasters now believe the recession was shallower than expected earlier in the year. GDP forecasts for the March 2010 year have been revised up from minus 1.6 per cent in June, to minus 0.4 per cent.

The outlook for the following year is positive at 2.8 per cent. But forecast ranges for the March 2011 year are in an unusually wide range from an anaemic 1.8 per cent to a robust 3.7 per cent.

The consensus are an average of New Zealand economic forecasts compiled from a survey of financial and economic agencies.

Forecasters expect unemployment to remain high at 7 per cent over the March 2010 and March 2011 years, before improving to 6.3 per cent in March 2012. Prolonged elevated levels of unemployment will be a headwind for households and industries reliant on their spending.

Forecasters are also split on the exchange rate outlook, with widely diverging views of reclaiming recent highs in coming years to plumbing towards 2001 lows. Uncertainty on the exchange rate remains a key risk for exporters.

- NZPA