Wednesday, April 9, 2008

Confidence slumps as New Zealand economy stalls

The latest Institute of Economic Research business survey shows that business confidence in New Zealand is at its lowest level in 33 years, and that the economy is stalling.

The economy could shrink in both the March and June quarters, institute chief executive Brent Layton said today. Asked if he expected a recession, Dr Layton said: "I think it will be a reasonably close call. It is not going to be a good time."

He said the Reserve Bank could be expected to hold interest rates steady, because of the finding that 45 percent of companies plan to raise their prices - the highest percentage since 1987.

Westpac Bank said the survey results showed the economy faced a "serious crunch", and that inflation could be "alarming". Sixty-four percent of the firms surveyed said they expected conditions to worsen in the next six months.

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