Economy bottoms, recovery predicted
PA Wellington The economy is now at the bottom of a deeper recession than expected, but inflation as low as 3.9 per cent for the year to next March can be expected, says the Reserve Bank. The bank forecasts a gradual investment-led and export-led recovery in economic activity from the middle of next year.
Its latest set of forecasts, released last evening, takes a more favourable view of inflation. The annual rate is projected to have fallen to 2.9 per cent by March, 1990. Previously, the bank predicted inflation in the March, 1989, year would still be about 5 per cent. The June quarter inflation figures released last month showed annual inflation at 6.3 per cent.
The bank said the main influence on the trend to lower inflation was a commitment to mediumterm price stability through non-accommodat-ing monetary policy.
New Zealand’s exchange rate was another favourable influence, as also were the depressed state of domestic demand and cuts in import tariffs, the bank said.
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Press, 13 August 1988, Page 9
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168Economy bottoms, recovery predicted Press, 13 August 1988, Page 9
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