The BNZ has made a gutsy call and says:
The BNZ says there is a greater than even chance that a recession will happen in the second half of the year.
“We have become victims of an almost perfect storm,” Mr Toplis said.
It has resulted in New Zealand businesses and consumers being pummelled by a combination of a global credit crisis, falling house prices, record fuel costs, a strong Kiwi dollar, high interest rates and the effects of the drought.
He warns that indicators such as the rapidly slowing housing market are just precursors and the credit crisis is only beginning to be felt by the wider economy.
Households are struggling under the weight of higher mortgage repayments and businesses are faced with rising debt-servicing costs as banks pay more to borrow overseas.
Household disposable income will be eroded by rising costs for food, electricity and rates, Mr Toplis says.
Transport companies and supermarkets say record fuel costs will have to be passed on to consumers.
“The economy is now very poorly and may well stay that way for some time to come,” Mr Toplis says.
Some of the factors are local, but the global economy isn’t looking too flash either.Tags: BNZ, Economy, recession