NZ
could face tougher times, Treasury warns
The Treasury expects Europe's economic woes to last another five to 10 years and warns New Zealand could face tougher economic times.
13
June, 2012
Treasury
Secretary Gabriel Mahklouf told Parliament's finance and expenditure
select committee on Wednesday that there is no easy fix to Europe's
problems and the impact of what is happening there is very serious.
"One
of the more depressing features of the current crisis is that I think
we're entering a world, or have entered a world, where this sort of
uncertainty and fragility of the world economy is probably going to
carry on for five to 10 years."
Mr
Mahklouf said the Treasury is forecasting that the European economy
will contract by 0.6% this year, but things could be worse.
He
warned that if the Greek and other European economies collapsed, that
could lead to a Depression and a slowdown in world trade that would
hurt China, Australia and ultimately New Zealand.
Finance
Minister Bill English also acknowledges there is no easy recovery for
the New Zealand economy.
"In
the case of this recovery from this particular recession, I think
it's widely understood that you get this sort of 'grumpy growth'
phenomenon, where rather than bouncing out of a recession with a
different balance in the economy, it's a long, slow grind."
While
the Treasury appears to be now more pessimistic than when it prepared
the economic forecasts for the Budget in May, neither it nor Mr
English are yet saying they are abandoning the growth forecasts.
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