A week before his sixth Budget, Finance Minister Michael Cullen is warning that the long-predicted economic slowdown is about to bite.
Thursday, May 19th 2005, 6:59AM
by The Landlord
In a speech to Canterbury Manufacturers hours after new data showed unemployment up for the first time since 2003, Dr Cullen said a likely bounce in the March quarter would be followed by an economic slowdown later this year.
"The slowdown in growth that has been confidently predicted in each of the last three years appears to be arriving," he said. It is set to last into 2006. "Instead of barrelling along on the open road at the rate of 4 per cent per annum, we have entered a built-up area and are reducing speed, heading to around 2.4 per cent by March 2006."
Beyond the domestic sector things were more promising, with low unemployment and commodity prices for dairy, beef and lamb at or near record levels, Dr Cullen said.
"As for the market's irrational exuberance over New Zealand's dollar, there is by definition little rational response the Government can make."
Next Thursday's Budget would focus on "the long game", he said.
The Government would maintain fiscal stability, prudent debt levels and carefully control its expenditure.
Recent forecasts of strong surpluses over the next few years had sparked ambitious plans in some quarters for spending or for tax cuts.
