Dairy prices will support New Zealand growth, says fund

The IMF report estimates part of New Zealand's growth will come from higher prices for dairy products. Photo / Sarah Ivey

The International Monetary Fund expects output growth in New Zealand of 3 per cent in 2010 and 3.25 per cent in 2011 to be supported by higher commodity prices, particularly for dairy products, and by stronger domestic demand.

The improved domestic demand would be on the back of higher farm income, permanent income tax cuts, and recovering house prices, the IMF said in an updated economic outlook.

Overall, the recovery under way in major economies would be relatively sluggish, although Australia and the newly industrialised Asian economies were off to a strong start and would likely stay in the lead, the IMF said.

It projected Australia's gross domestic product to grow 3 per cent in 2010 and 3.5 per cent in 2011, helped by strong demand for commodities, particularly from China. Australian growth in 2010 would be led by domestic demand, both private and public.

- NZPA