The economy looks set for slower growth in the second half as “patchiness” continues, according to Westpac Bank’s latest quarterly report.
After a solid performance in the first half of 2012, the economy has lost momentum due to a wobble in the construction-led upturn, the bank's economists said.
The economy grew 0.6 per cent in the three months to June 30, to be up 2.6 per cent from a year before, mainly because of good growing conditions for farmers.
The Canterbury rebuild, good growing conditions and a buoyant housing market are boosting the economy. But on the other side it is facing a slow global economy, a high New Zealand dollar and government belt-tightening.
Since June, conditions had become more challenging for exporters and import competing manufacturers, as a deepening global downturn coincided with a high New Zealand dollar, Westpac said. The dollar was trading at US82.4c today and has been above the US80c mark for most of the year.
“We should expect a lumpy timeline for growth as well as divergence across regions,” Westpac chief economist Dominick Stephens said.
Canterbury was surging forward but parts of the North Island were struggling.
“Lumps and bumps aside, the big picture remains the same - a construction led upturn in economic growth,” he said.
Westpac is forecasting growth of 2.5 per cent in the year to March 30, 2013, picking up to 3.4 per cent the following March year. Unemployment is expected to improve from 6.8 per cent now, to 6.2 per cent in March next year and 5.1 per cent in 2014.