4 Oct 2011

Global sentiment a risk to NZ - Treasury

4:01 pm on 4 October 2011

The Treasury says increasingly downbeat global sentiment is posing a risk to New Zealand's economic outlook.

In a monthly report on economic indicators, the Treasury says the outlook for the global economy deteriorated significantly in September as concerns mounted about Greece's debt problems and financial markets worried about growth in the eurozone and United States.

The Treasury says that could affect funding costs, demand for New Zealand's exports and confidence levels - but so far the effects are mild.

It says if conditions worsen further, high terms of trade and the Canterbury rebuild should provide some support to the economy. New Zealand's exposure to Australian and Asian economies will also help.

On another positive note, the Treasury says strengthening domestic demand boosted GDP in the first half of the year, while historical measures of New Zealand's indebtedness may have overstated the nation's vulnerability.