Press Release – Property Council Of New Zealand
MEDIA RELEASE 29.03.2012 ‘Slow, muddling’ economic recovery predicted by finance and property commentators
‘Slow, muddling’ economic recovery predicted by finance and property commentators
Cautious optimism about growth and recovery for the New Zealand economy was the prevailing message at the annual Market Outlook Breakfast held by Property Council in Auckland this morning.
Speakers from the finance and property sectors gave their views of where they felt global and domestic economies were headed, to a packed room of around 250 property industry representatives.
Westpac Chief Economist Dominick Stephens gave his overview of what’s happening globally, commenting that he was sceptical about the improvements “everyone is getting excited about in Europe” and predicting another recession there.
“And while the United States is looking stronger on the books, the Government has to cut back and that will restrain the economy, so we can expect muddling, low growth in the US,” Mr Stephens said.
Looking to the Indian and Chinese markets, Mr Stephens said both countries’ growth was slowing considerably. “The implication for New Zealand is that with inflation under control in China, we may find New Zealand on a growth path in the next six months, although it will also be a muddling, slow and mixed recovery here.”
Mr Stephens pointed to expected high levels of construction activity with the rebuild in Canterbury as another “big reason to expect change in the year ahead”.
CEO of Argosy Property Ltd Peter Mence echoed Mr Stephen’s view of a “relatively low and bumpy” recovery, adding that New Zealand should “thank the banks” for handling the fallout from the Global Financial Crisis competently in comparison to the ’87 property crash. Mr Mence also stated that although Local Government has an important part to play in growing the economy, “contributing, cost, time and uncertainty is not it”.
Goodman NZ’s CEO John Dakin agreed with the other speakers that interest rates will be lower for longer and forecasted a “perfect storm” in retail driven by online purchasing, the proliferation of mobile devices and leveraging of social media. Mr Dakin referred to Amazon, “the fastest growing e-commerce business in the world”, and research showing gains in warehouse stock and indicators of a shifting focus for commercial property.
Another factor that would have an impact on the economy was the significant amount of capital currently available for investment, according to Mr Dakin. “But it’s very selective – investors want high quality assets, and they are accepting lower returns in exchange for this,” he said.
Market Outlook Breakfasts are held annually by Property Council to keep members abreast of financial trends, short to medium forecasts for the economy, and the impact of these on the property sector.