Table 1.2 - Economic forecasts[1]
|
(Annual average % change, March years) |
2009 Actual |
2010 Forecast |
2011 Forecast |
2012 Forecast |
2013 Forecast |
2014 Forecast |
|---|---|---|---|---|---|---|
| Private consumption | -1.1 | 0.6 | 2.9 | 1.7 | 2.5 | 2.3 |
| Public consumption | 4.2 | 1.0 | 2.3 | 1.4 | 0.9 | 0.6 |
| Total consumption | 0.1 | 0.7 | 2.8 | 1.6 | 2.1 | 1.9 |
| Residential investment | -22.8 | -9.9 | 22.0 | 13.5 | 7.3 | 4.3 |
| Non-market investment | 12.0 | -2.8 | -5.4 | -3.6 | 3.8 | 4.6 |
| Market investment | -1.9 | -10.4 | 6.2 | 10.3 | 4.7 | 3.0 |
| Total investment | -7.2 | -9.2 | 10.5 | 11.4 | 5.6 | 3.5 |
| Stock change2 | 0.0 | -1.9 | 1.1 | 0.4 | 0.3 | 0.0 |
| Gross national expenditure | -1.6 | -3.3 | 5.6 | 4.3 | 3.3 | 2.3 |
| Exports | -3.4 | 2.8 | 1.6 | 4.7 | 3.5 | 3.3 |
| Imports | -4.7 | -9.9 | 9.0 | 8.9 | 5.0 | 1.5 |
| GDP (expenditure measure) | -1.0 | 0.4 | 3.4 | 3.0 | 2.7 | 3.0 |
| GDP (production measure) | -1.4 | -0.3 | 3.2 | 3.1 | 2.9 | 3.0 |
| Real GDP per capita | -2.4 | -1.5 | 2.0 | 2.1 | 2.0 | 2.1 |
| Nominal GDP (expenditure basis) | 1.7 | 1.7 | 7.0 | 6.3 | 4.8 | 5.1 |
| GDP deflator | 2.7 | 1.3 | 3.5 | 3.3 | 2.0 | 2.1 |
| Output gap (% deviation, March year)3 | 0.2 | -1.7 | -0.6 | -0.6 | -0.8 | -0.6 |
| Employment | 0.9 | -1.6 | 0.2 | 2.0 | 2.1 | 2.0 |
| Unemployment4 | 5.0 | 7.1 | 6.2 | 5.5 | 5.1 | 4.6 |
| Nominal wages5 | 5.3 | 3.3 | 2.6 | 3.5 | 3.7 | 3.9 |
| CPI inflation6 | 3.0 | 2.2 | 5.9 | 2.4 | 2.4 | 2.4 |
| Merchandise terms of trade7 | -0.7 | -6.3 | 4.9 | 0.6 | 1.7 | 1.0 |
| Current account balance | ||||||
| - $billion | -14.6 | -4.9 | -8.9 | -13.1 | -15.7 | -17.2 |
| - % of GDP | -7.9 | -2.6 | -4.4 | -6.1 | -7.0 | -7.3 |
| TWI8 | 53.7 | 65.3 | 65.2 | 63.5 | 58.5 | 54.0 |
| 90-day bank bill rate8 | 3.7 | 2.7 | 4.3 | 5.2 | 5.4 | 5.7 |
| 10-year bond rate8 | 4.6 | 5.9 | 5.9 | 5.9 | 5.9 | 6.0 |
Notes:
- Forecasts finalised 16 April 2010
- Contribution to GDP growth
- Estimated as the percentage difference between actual real GDP and potential real GDP
- Household Labour Force Survey, percent of the labour force, March quarter, seasonally adjusted
- Quarterly Employment Survey, average ordinary-time hourly earnings, annual percentage change
- Annual percentage change
- System of National Accounts (SNA) basis, annual average percentage change
- Average for the March quarter, actual for 2010
A longer time series for these variables is provided on page 160.
Sources: Statistics New Zealand, Reserve Bank of New Zealand, the Treasury
...as the global economy strengthens...
A stronger global economy is an important driver of these forecasts. The global financial crisis in late 2008 led the world economy into its worst and most synchronised recession since World War II. Output in the economies of our top-12 trading partners is estimated to have fallen by 0.9% in the 2009 calendar year, including falls of 2.4% in the United States, 4.9% in the United Kingdom and 5.2% in Japan. However, the recovery in the global economy has taken hold more strongly than previously expected, and all our major trading partners have returned to growth, with emerging economies particularly robust.
The economies of our top-12 trading partners are expected to grow by a relatively strong 3.7% in each of 2010 and 2011, and an average of 3.5% in each of the subsequent three years. Fast-growing emerging economies, particularly China, helped lead the world out of recession, and will remain crucial drivers of the global economy. New Zealand will benefit as fast-growing countries are taking a larger share of our exports over time. There will also be indirect benefits as economic growth in Australia, New Zealand's largest trading partner, is boosted by demand for minerals from emerging markets.
Although the global outlook is stronger than previously expected, there is still an ongoing impact from the financial crisis. Weak recoveries are predicted in Europe, Japan and the United Kingdom, in contrast to high growth in emerging economies. There are also a number of potential threats to the sustainability of the global recovery, which are explored further in the Risks and Scenarios section from page 76. In particular, concerns over sovereign debt in the Euro area, which have reached crisis levels in Greece and threaten to spread further, have worsened significantly since the Budget forecasts were finalised.
...and boosts demand for New Zealand's exports
World spot prices for New Zealand's commodity exports have returned to the peaks of 2008. A stronger world economy, especially emerging economies, has contributed to the rebound in prices, particularly for dairy products. Some of this increase is expected to be temporary, but dairy prices will be underpinned by growing demand for protein in the developing world as incomes rise. Higher export prices relative to import prices are expected to see the merchandise terms of trade strengthen (Figure 1.3).
- Figure 1.3 - Merchandise terms of trade (SNA)
- Source: Statistics New Zealand, the Treasury
Growth in export volumes is forecast to rise as trading partner growth strengthens and the Rugby World Cup in late 2011 temporarily lifts services exports. Ongoing strong growth in exports over the rest of the forecast period reflects an assumed gradual depreciation of the New Zealand dollar. Already, a relatively low exchange rate against the Australian dollar has lifted prospects for service exports and non-commodity manufacturing. Changes in tax policy that help to shift resources to the tradable sector are also assumed to boost non-commodity exports slightly.
