Inflation interest rates two goals

Press, 28 July 1989, Page 4

Inflation interest rates two goals

By Pattrick Smellie in Wellington Goals, including interest rates of seven to 10 per cent by the end of 1992, were set in a commentary to the Budget, entitled “Securing Economic Recovery.” Other key targets are to achieve inflation of zero to two per cent, repay a third of the public debt, and to reduce the number of unemployed to below 100,000. Some of the goals are remarkably close to those aired in the last fortnight by the former Minister of Finance, Mr Douglas. Three-year forecasts prepared by the Treasury put inflation at 5.8 per cent by the middle of next year, falling to 3.2 per cent in mid-1991 and 1.7 per cent in mid-1992. Economic growth of 2.8 per cent is forecast by 1990/91, spurred by growth in private sector investment, strong export and import growth, but held back by continuing restraint in government spending. Even at 2.8 per cent growth, New Zealand would still be about 1 to 2 per cent below the O.E.C.D. average growth rate. Unemployment is forecast to peak at 158,000 this year, falling to 133,000 in mid-1992. “Over all, a modest but increasing rate of recovery is projected this year and over 1990/91,” the Treasury says.