23 Feb 2009

Unemployment forecasts criticised

8:17 pm on 23 February 2009

A senior economics lecturer is criticising recent unemployment forecasts as irresponsible and unnecessary.

The New Zealand Institute says unemployment could rise to 11.2% over the next two years as the recession worsens - double the Treasury's December forecast.

Rhema Vaithiananthan, of Auckland University's Department of Economics, says such forecasts can influence what happens in the economy.

Dr Vaithiananthan says workers will now believe they are at greater risk of being laid off, and that will see people cut back on expenditure to "save for a rainy day".

She says that will affect demand for services, which in turn will affect employment.