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Consumers more gloomy about economic outlook: Roy Morgan

Monday 13th October 2008

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New Zealand consumers grew more pessimistic about the economic outlook this month, amid signs of a widening global slowdown that will erode demand for the nation's exports.

Some 51% of respondents expect the economy to deteriorate over the next 12 months, and 47% say they're worse off financially than they were a year ago, according to the Roy Morgan survey.

The central bank is expected to cut the official cash rate at least 50 basis points to 7% on October 23 in what may be its steepest easing cycle since 2001 to revive an economy in its first recession in a decade. Economists such as Shamubeel Eaqub at Goldman Sachs JBWere say New Zealand is yet to feel the second-round effects of recession, including job losses and a rising unemployment rate.

"As the global slowdown intensifies, New Zealand must increase domestic consumption to drive growth and the best way to support the domestic economy is with lower interest rates," said Gary Morgan, a spokesman for Roy Morgan.

Government figures today showed retail sales gained 0.4% in August, slightly above the 0.3% pace predicted in a Reuters survey of economists.

The percentage of people seeing worse times ahead rose from 40% in the previous fortnightly poll. It also showed 39% think it is a good time to buy a major household item, while 49% said it was a bad time.

Some 55% of New Zealanders expect their family to be better off financially this time next year, up 1% from the previous survey.

By Jonathan Underhill



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