November 12, 2009
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News: New Zealand Slow To Recover
Although slow to recover, a modest 0.1 percent growth in New Zealand's economy is a sign the country's recession has ended. However, consumer confidence remains low as overall debit and credit card spending declined by 0.2 percent in October. Removing what is considered necessary expenses of fuel and auto repair, debit and credit card spending fell 0.4 percent. Experts were more optimistic at the end of September when New Zealand realized a debit and credit card spending increase of 0.7 percent; the fourth consecutive monthly increase. According to Craig Eber, Senior Economist at Bank of New Zealand Ltd, despite the positive signs that the recession has ended, all is not well as consumers continue to be cautious about spending. Reduced spending is a reflection on current retail environment.
Most analysts believe the reduced debit and credit card spending combined with an increase in unemployment to 6.5 percent, the highest jobless rate in nine years, indicates New Zealand's economical recovery will be a slow and gradual process. Reserve Bank Governor, Alan Bollard stated that New Zealand will continue to lag behind neighboring Australia. The Treasury Department believes the economy will accelerate in the later part of the year with a recovering housing market that rose 0.2 percent in October from same time last year, and rising immigration that will buoy credit card spending. The increase in housing values was the first in 16 months and immigration was the highest in five years.
A report released by the ANZ National Bank Ltd. and conducted by Roy Morgan Research indicated that credit card consumers' confidence escalated in October for the first time in nearly two years. A plus for New Zealand; the country's benchmark rate of 2.5 percent remains significantly higher than the U.S. making the country more attractive to investors. However, a decline in the New Zealand dollar on Tuesday after its highest climb since June is another indicator that economic recovery will be slow.