Recession in NZ will 'hit trough mid-2009'
10:00AM Monday Nov 17, 2008

The New Zealand recession will deepen and trough around mid-2009, according to Goldman Sachs JB Were's economic outlook.

The financial service firm was predicting lower economic growth and the official cash rate (OCR) to be at 3.5 per cent by the middle of next year.

It was also hinting at the possibility the OCR will be cut by 1.5 per cent next month.

Shamubeel Eaqub, director of Australia & New Zealand Investment Research, said the domestic recession was well established and set to continue with tight monetary and financial conditions exacerbating a deepening and spreading housing bust.

Rapid deterioration in global growth prospects in recent months meant the outlook for 2009 was marked down.

The company now expected economic growth to slow from 3.2 per cent in 2007 to an estimated 0.3 per cent in 2008 and - 1.0 per cent in 2009, (previously 1.3 per cent).

"Consensus forecasts for 2008 and 2009 are 0.5 per cent and 0.6 per cent respectively and do not fully incorporate the weak global growth prospects in our view," Mr Eaqub said.

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