Bank says GDP has improved

By Phil Boeyen, ShareChat Business News Editor

Monday 2nd July 2001

The country's GDP is predicted to show an improvement in the June quarter.

An economic report from ASB Bank says although last week's weak March GDP result was a surprise, it is confident that the June quarter, and subsequent quarters, will perk up.

The report predicts dairy and tourism will continue to underpin growth, and the rest of the economy will begin to feel the positive flow-on effects of higher rural incomes.

It also believes low interest rates will support an improvement in retail sales, and says the construction sector should also start to make a positive contribution.

Although the global economy continues to pose a risk for domestic growth, the report claims the US and Australian economies have shown signs of turning the corner and most major countries are expected to record an improvement next year.

"Given the lacklustre performance of the domestic economy as well as the risks associated with the global slowdown, we believe that the easing in monetary conditions this year was appropriate.

"However, further cuts in the OCR are no longer considered necessary. The Reserve Bank is expected to start raising the OCR early next year as it seeks to unwind current stimulatory conditions."

The Reserve Bank is due to announce any change to the OCR on Wednesday.

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