Tuesday, April 13, 2010

Economic risks remain

New Zealand's economic outlook has improved this year, but a swifter recovery for other nations could put the country's growth at risk, credit agency Dun and Bradstreet said.

New Zealand's economy is still forecast to grow by 1.8 per cent this year, unchanged from D&B's previous economic and risk report in January, but the risk trend has been upgraded to improving from deteriorating.

The improvement in key markets, including Australia and China, has supported New Zealand exports, reducing the country's liquidity risk.

But unemployment has continued to rise despite three consecutive quarters of economic growth, undermining the country's recovery.

New Zealand is rated one of the top four safest countries in the region and among the top 20 in with world, D&B calculated.

"This is a significant achievement and it demonstrates the strength of New Zealand's economy at a time when the rate of recovery in many other developed nations remains sluggish," D&B New Zealand general manager John Scott said.

"New Zealand is classified a low risk environment for business investment, however, as the rest of the developed world recovers, global competition will intensify.

"Therefore, we need to ensure our focus on reform, strong economic management and sound risk practices continue," Mr Scott said.

Challenges facing New Zealand included a reduction in economic stimulus from the Government, and the likelihood of interest rate rises this year.

Global growth is tipped to reach 2.4 per cent this year, with China's economy forecast to grow 9.8 per cent, the United States 2.0 per cent and Europe 0.7 per cent.

New Zealand was ranked second in the Asia-Pacific region at DB2c, compared with Australia's DB1d rating.

Sixteen countries had had their country ratings downgraded since the start of the year, including Japan and the Netherlands, while South Korea was one of the five countries to have its rating upgraded by D&B.


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