The New Zealand economy shrank for the third consecutive quarter in September 2008 and indicators pointed to further quarterly declines in December 2008 and March 2009, the Treasury said Monday.

`All indicators suggest the New Zealand economy will remain in recession until at least March 2009. As a result, growth appears to be developing in line with the December Update downside scenario, at least in the near term, with recent international developments pointing to further downside risk`, the Treasury stated.

The contraction in the September quarter highlighted continuing weakness in foreign and domestic demand. Annual average growth in production GDP dropped to 1.7% in September from 2.7% in June.

Annual inflation declined to 3.4% in December from 5.1% in September. Average prices eased nearly 20% in the December quarter on lower fuel cost. The medium-term outlook for inflation eased considerably, the Treasury stated.
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