ECI shows return to growth

Media release

22 September 2009

ECI shows return to growth

A comprehensive economic indicator is showing a return to growth for the New Zealand economy.

Business NZ’s Economic Conditions Index (ECI) shows a return to expansion after 18 months of negative growth.

The ECI, run in conjunction with Business NZ’s Planning Forecast, shows a value of positive 2 for the September 2009 quarter.  (The previous three quarters have recorded values of minus 11, minus 4, and zero.)

Positive aspects for the September quarter include improvements in capital flows, increases in commodity prices and healthy net migration.  Negative aspects include the weak US dollar which continues to put upward pressure on the NZ$, and the threat of continued inflation in the non-tradeables sector of the economy, largely in state or local government activities that are not subject to competition.

Business NZ economist John Pask says while the move into positive territory is good news, growth is likely to be tentative at least during 2010.  He said the unemployment rate may hit 7.5% by 2010, but this is a less adverse forecast than earlier.

The Economic Conditions Index (ECI) is a composite index of 33 indicators, including GDP, export volumes, commodity prices and inflation, debt and confidence data.

The ECI and Business Planning Forecast for September 2009 are here on www.businessnz.org.nz.

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