Limited growth forecast

Press, 17 December 1980, Page 7

Limited growth forecast

PA Wellington Overseas deficits will seriously restrain New Zealand's economy until the mid-1980s and mean limited growth in the economy and employment, a staff member of the Planning Council, Dr E. Haywood, says in a booklet.

During the second half of, the decade the growth rate is expected to increase as import savings and exports come from large " projects, he concludes in his bookjet, “Forecasting the Economy in the Eighties.”

In an introduction to the booklet, the Planning Council’s chairman, Sir Frank Holmes, says it puts the big energy and energy-related projects in perspective, and indicates that New Zealand needs balanced development agriculture, industry, and services for adequate economic growth. Dr Haywood says the total contribution of the large-scale projects to the

level of economic activity in the second half of the decade will be about 6 per cent.

He estimates that growth rates of about 4.5 per cent are needed to largely eliminate unemployment during the late 1980 s.

In forecasting the likely effect of the large-scale projects, Dr Hayward says he decided to increase the original cost estimates by 25 per cent and the time estimated to complete the projects by about 50 per cent. A recent study by the Rand Corporation in the United States had shown big differences between initial cost estimates and final costs of large energy projects. “Cost over-runs are typically 300 per cent, in constant dollars, for first of a kind energy process plants . . . even after pilot plants are built the errors are large. Some run 500 per cent over initial estimates,” the Rand Study said.