18 Jan 2010

Economists divided on growth prospects

7:26 pm on 18 January 2010

Economists are in two minds about how strong New Zealand's economic recovery will be this year.

Westpac is forecasting that the economy will grow by 3.7% in 2010 as New Zealand rides on the rapidly recovering coat-tails of emerging economies.

Dominic Stephens, an economist at the bank, says the stronger than expected data may force the Reserve Bank to raise interest rates sooner than expected.

In contrast, credit agency Dun & Bradstreet is forecasting the economy will grow by only 1.8% as global growth remains sluggish and governments wind down their stimulus packages.

Dun & Bradstreet general manager John Scott says New Zealand has survived the recession relatively unscathed, and many of the country's trading partners are recovering faster than expected.

Nevertheless, the global economy will remain weak for some time yet, and that will affect New Zealand's economy, Mr Scott says.