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Dairy price collapse dangerous for New Zealand economy

Staff writer |
The downturn in the global dairy market is slowing growth in the New Zealand economy, and eroding business and consumer confidence, an independent economic think-tank warned.

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The effects of reduced farm income would reverberate through the economy as farmers reined in spending to ride out the poor seasons, according to the Quarterly Predictions report from the New Zealand Institute of Economic Research (NZIER).

"We expect annual average GDP growth to dip to close to 2 percent by the end of this year, before rebounding over 2016 as the boost from the lower New Zealand dollar filters through to a broad range of exporting sectors," said an NZIER statement.

The outlook for many other sectors was positive and the economy was receiving a boost from continued strong net migration, said the statement.

Construction remained solid and was expected to remain a key support of economic activity through the next five years.

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