Slump 'still to come’

Press, 11 August 1980, Page 11

Slump 'still to come’

NZPA Washington New Zealand has still to experience' an "outright recession,” according to an international. economic forecast published in: Washington in the' financial magazine “Business Week”.

The study on the world economic outlook was made by a body called Project Link, which is described by the magazine as “an econometric model of the global economy.” A brief reference to New Zealand was tagged on the end of a section on the Australian economy. It said, "New Zealand, meanwhile, will experience

an outright recession as restrictive monetary and fiscal policies reduce domestic demand while exports are also weakening. Altogether, real G.D.P. (gross domestic product) should decline 1 per cent in the fiscal year that began last March, in contrast to last year’s 3 per cent gain. Employment will fall off but although inflation has probably peaked it could continue at 16 per cent in 1981.” The Australia-New Zealand section was signed by Duncan Iremonger and Phyllis Rosendale, of the University of Melbourne. The study showed that

New Zealand is apparently in good company. It said that the world economy was in a slump and because economic policies would stay relatively restrictive the recovery expected next year “will be anaemic.” The worldwide inflation rate would come down only about 2 per cent next year and would still be above the 1979 rate. The reference to New Zealand is in sharp contrast to an article in the same magazine in April which said that New Zealand seemed to be poised for an economic recovery that few observers had expected even a year ago.