20 Sep 2010

GDP figures likely to indicate weak recovery - economist

7:14 am on 20 September 2010

A Thomson Reuters poll of economists estimates figures due out this week will show the economy expanded 0.8% in the three months to June.

The head of markets economics and strategy at ANZ New Zealand, Khoon Goh, says a rise in consumption and delayed housing investment will have offset weaker net exports and a fall in inventories.

Mr Goh, who expects quarterly growth of 0.7% in Friday's Gross Domestic Product (GDP) figures, says this would indicate a weak recovery even before more downbeat economic news on spending, house sales and confidence.

While the quarterly figures are historical, he says, they'll give an important insight into the underlying pace of the economy before the Canterbury earthquake and the collapse of South Canterbury Finance.

He says a figure of 0.7% would indicate the economy was not as strong as had been thought earlier in the year.

"A lot of the indicators since June have started to ease off, so in fact the underlying momentum of the economy as we enter the September quarter could in fact be even weaker than the June numbers."

If that's the case, he says, the earthquake could have a significant impact on the third quarter's GDP growth, which could be 0.2%.