NZ economy performing despite global jitters

BusinessNZ

Monday 5th September 2011

BusinessNZ’s Economic Conditions Index (ECI) sits at 19 for the September 2011 quarter, up 4 from the previous quarter and up 32 on a year ago.

International markets remain volatile, underpinned by continuing high levels of debt, which are impacting on investor confidence. However, the outlook for NZ’s major trading partners, including Australia and China, while under some pressures of late, still remains relatively healthy.

While there have been some reductions in world commodity prices of late and ongoing volatility in the NZ/US cross rate, NZ continues to have relatively favourable terms of trade.

Both business and consumer confidence are holding up relatively well with households continuing to focus on debt reduction, while the economy will get a shot in the arm from the Rugby World Cup and the ongoing rebuild of Christchurch.

Consumer confidence is likely to rise further as the labour market continues to improve, while the prospect of a delay in interest rate rises will further boost confidence. However, inflationary pressures remain a concern.

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