Economy on the rise

Improvement in the economy is heralded in the BusinessNZ Planning Forecast for the June quarter 2010.

The forecast incorporates Business NZ’s Economic Conditions Index (ECI) which tracks 33 indicators including GDP, export volumes, commodity prices and inflation, debt and confidence figures.

The ECI for the June quarter is 18, up 5 from the previous quarter and up 12 on a year ago. The ECI is now at its highest point since the third quarter of 2003.

There is however potential for ongoing inflationary pressures with the CPI headline rate projected to reach 5.9 percent next year as a result of a number of one-offs impacting on the CPI. While the Reserve Bank in terms of its mandate does not have to take into account these one-offs when setting monetary policy, the danger is that individuals and business will react to them.